THE  TAXATION 


OP 

Property  of  Railroad  Companies  in  California 

AS  AFFECTED  BY  THE 

Fourteenth  Amendment  of  the  Federal  Constitution. 


OPINIONS 

OF 

JUSTICE  FIELD  and  JUDGE  SAWYER, 

DELIVERED  IN  THE 

U.  S.  CIRCUIT  COURT  AT  SAN  FRANCISCO, 
September  17th,  1883. 


[Printed  from  a Revised  and  Official  Copy.] 


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. 

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IN  THE 

ift*.  United  «f  tife, 

NINTH  CIRCUIT, 

DISTRICT  OF  CALIFORNIA . 


COUNTY  OF  SANTA  CLARA 

vs. 

SOUTHERN  PACIFIC  RAILROAD  COMPANY. 


COUNTY  OF  SACRAMENTO 
vs. 

CENTRAL  PACIFIC  RAILROAD  COMPANY, 

And  other  similar  Tax  Cases. 


SYLLABUS. 

1.  The  property  and  franchises  of  the  Southern  Pacific  Eailroad  Com- 
pany and  of  the  Central  Pacific  Railroad  Company,  corporations  created 
under  the  laws  of  California,  though  the  companies  are  employed  by  the 
General  Government  for  postal  and  military  purposes,  and  were  aided  by 
land  grants  and  loans  in  the  construction  of  their  roads,  are  not  exempt 
from  State  taxation  in  the  absence  of  Congressional  legislation  declaring 
such  exemption.  It  is  competent  for  Congress  to  exempt  any  agencies  it 
may  employ  for  services  to  the  General  Government  from  such  taxation 
as  will,  in  its  judgment,  impede  or  prevent  their  performance. 

2.  The  Fourteenth  Amendment  of  the  Constitution,  in  declaring  that 
no  State  shall  deny  to  any  person  within  its  jurisdiction  the  “ equal  pro- 
tection of  the  laws,”  imposes  a limitation  upon  the  exercise  of  all  the 
powers  of  the  State  which  can  touch  the  individual  or  his  property,  in- 
cluding that  of  taxation. 

3.  The  “ equal  protection  of  the  laws  ” to  any  one  implies  not  only  that 
the  means  for  the  security  of  his  private  rights  shall  be  accessible  to  him 
on  the  same  terms  with  others,  but  also  that  he  shall  be  exempt  from 
any  greater  burdens  or  charges  than  such  as  are  equally  imposed  upon 
all  others  under  like  circumstances.  This  equal  protection  forbids  un- 
equal exactions  of  any  kind,  and  among  them  that  of  unequal  taxation. 


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4.  Uniformity  in  taxation  requires  uniformity  in  the  mode  of  assess- 
ment, as  well  as  in  the  rate  of  percentage  charged. 

5.  The  thirteenth  article  of  the  Constitution  of  California  declares  that 
“ a mortgage,  deed  of  trust,  contract,  or  other  obligation  by  which  a debt 
is  secured  shall,  for  the  purposes  of  assessment  and  taxation,  be  deemed 
and  treated  as  an  interest  in  the  property  affected  thereby,”  and  that, 
“ except  as  to  railroad  and  other  quasi  public  corporations,”  the  value  of 
the  property  affected,  less  the  value  of  the  security,  shall  he  assessed 
and  taxed  to  its  owner,  and  that  the  value  of  the  security  shall  he 
assessed  and  taxed  to  its  holder,  and  that  the  taxes  so  levied  shall 
he  a lien  upon  the  property  and  security,  and  may  he  paid  hy  either 
party  to  the  security ; that  if  paid  hy  the  owner  of  the  security,  the 
tax  levied  upon  the  property  affected  thereby  shall  become  a part  of 
the  debt  secured  ; and  if  the  owner  of  the  property  shall  pay  the  tax 
levied  on  the  security,  it  shall  constitute  a payment  thereon,  and 
to  the  extent  of  such  payment  a full  discharge  thereof.  In  the  assess- 
ment of  property  of  the  defendants — railroad  companies — the  mortgages 
thereon  were  not  deducted,  hut  the  whole  value  of  the  property,  notwith- 
standing the  mortgages  thereon,  was  assessed  and  the  property  taxed  ac- 
cording to  such  assessment,  to  those  companies;  Held  (1),  treating  the 
mortgages  as  transferring  a taxable  interest  in  the  property,  that  in  as- 
sessing against  the  company  the  interests  with  which  they  had  at  the 
time  parted  by  their  mortgages,  and  taxing  them  upon  that  assessment, 
was  a proceeding  to  take  the  property  of  the  companies  without  due  pro- 
cess of  law;  and  (2)  treating  the  mortgages  as  a lien  or  incumbrance 
upon  the  property,  that  by  not  deducting  their  amount  in  the  assessment 
of  the  value  of  the  property  of  the  railroad  companies  for  taxation,  as  is 
done  in  the  valuation  of  property  of  natural  persons,  when  subject  to  a 
mortgage,  there  was  a discrimination  against  the  companies,  which  re- 
sulted in  imposing  a greater  burden  upon  their  property  than  is  imposed 
upon  the  property  of  natural  persons. 

6.  Persons  do  not  lose  their  right  to  equal  protection  guaranteed  by 
the  Fourteenth  Amendment  to  the  Federal  Constitution  when  they  form 
themselves  into  a corporation  under  the  laws  of  California. 

7.  The  State  possesses  no  power  to  withdraw  corporations  from  the 
guaranties  of  the  Federal  Constitution.  Whatever  property  a corporation 
lawfully  acquires  is  held  under  the  same  guaranties  which  protect  the 
property  of  natural  persons  from  spoliation. 

8.  Under  the  reserved  power  to  amend,  alter,  or  repeal  the  laws  under 
which  private  corporations  are  formed,  the  State  cannot  exercise  any  con- 
trol over  the  property  of  a corporation,  except  such  as  may  be  exercised 
through  control  over  its  franchise,  and  over  like  property  of  natural  per- 
sons engaged  in  similar  business. 

9.  The  proceeding  for  the  assessment  of  property — that  is,  the  ascer- 
tainment of  its  value  upon  evidence  taken — is  judicial  in  its  character; 
and  to  its  validity  the  law  authorizing  it  must  provide  some  kind  of  no- 
tice,, and  an  opportunity  to  be  heard  respecting  it,  before  the  proceeding 


b 


becomes  final ; or  it  will  want  the  essential  ingredient  of  due  process  of 
law.  The  notice  may  be  given  by  personal  citation  or  by  statute.  It  is 
usually  given  by  a statute  prescribing  a time  and  place  where  parties 
may  be  heard  before  boards  appointed  for  the  correction  of  errors  in  as- 
sessment. 

10.  The  Constitution  of  California  (section  15,  article  IY.)  provides  that 
“ on  the  final  passage  of  all  bills  they  shall  be  read  at  length,  and  the 
vote  shall  be  by  yeas  and  nays  upon  each  bill  separately,  and  shall  be 
entered  on  the  journal,  and  no  bill  shall  become  a law  without  the  con- 
currence of  a majority  of  the  members  elected  to  each  house.”  Under 
this  provision,  the  Court,  to  inform  itself,  will  look  to  the  journals  of  the 
Legislature,  and  if  it  appears  therefrom  that  the  bill  did  not  pass  by  the 
constitutional  maj ority , then  it  will  not  be  regarded  as  a law.  Sawyer,  J. 

11.  The  journals  of  the  Legislature  show  that  the  Act  of  March  14, 
1881,  mentioned  in  the  opinion,  never  became  a law.  Sawyer,  J. 

12.  Where  the  original  written  journals  on  file  in  the  office  of  the  Sec- 
retary of  State  differ  in  any  material  particular  from  the  printed  journals, 
the  original  written  journals  are  the  authentic  official  records,  and  must 
control.  Sawyer,  J. 


Counsel  for  Plaintiffs : — 

E.  C.  Marshall,  Att’y-Gen.  of  California, 

D.  M.  Delmas, 

D.  S.  Terry, 

A.  L.  Rhodes, 

W.  T.  Baggett, 

J.  H.  Campbell,  List.  Att’y  of  Santa  Clara  Co., 

J.  T.  Carey,  Dist.  Att’y  of  Sacramento  Co.,  and 
J.  M.  Lesser,  List.  Att’y  of  Santa  Cruz  Co. 

Counsel  for  Defendants : — 

S.  W.  Sanderson, 

J.  N.  Pomeroy, 

T.  I.  Bergin, 

H.  S.  Brown, 

S.  C.  Denson,  and 
P.  D.  Wiggington. 


Digitized  by  the  Internet  Archive 
in  2016 


https  ://arch  i ve  .org/detai  Is/taxationof  properOOu  nit 


OPINION  OF  THE  COURT. 


By  the  Court:  Field,  Circuit  Justice: 

These  are  actions  for  the  recovery  of  unpaid  State  and 
County  Taxes  levied  upon  certain  property  of  the  several 
defendants,  either  for  the  fiscal  year  of  1881  or  of  1882, 
and  alleged  to  be  due  to  the  plaintiffs,  with  an  addi- 
tional five  per  cent.,  as  a penalty  for  their  non-payment, 
and  interest.  The  defendants  are  corporations  formed  un- 
der the  laws  of  California,  and  the  taxes  claimed  were 
levied  on  the  franchise, roadway,  roadbed,  rails  and  rolling- 
stock  of  each  of  them  as  an  unit,  without  separation  or  dis- 
tinction in  the  valuation  of  the  different  parts  composing 
the  whole.  To  two  of  the  corporations,  the  Southern  Pa- 
cific Railroad  Company  and  the  Central  Pacific  Railroad 
Company,  privileges  and  powers,  other  than  those  acquired 
under  the  laws  of  the  State,  were  conferred  by  grant  of 
the  General  Government;  and  for  them  obligations  and 
burdens  were  assumed  not  contemplated  nor  possible  under 
their  original  organization. 

It  is  contended  that  Congress  has  selected  these  corpo- 
rations as  the  special  agents  and  instruments  of  the  nation 
for  public  purposes,  and  to  that  end  has  clothed  them  with 
faculties,  powers  and  privileges  to  enable  them  to  construct 
and  maintain  their  roads  as  postal  and  military  roads  of 
the  Government;  that  the  State  by  an  act  of  its  Legisla- 
ture has  assented  to  the  acceptance  of  these  faculties, 
powers  and  privileges,  and  that  the  companies  in  consid- 
eration thereof  have  assumed  obligations  to  the  General 


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Government  with  the  discharge  of  which  the  State  can- 
not interfere;  that  the  power  to  tax  their  franchises 
involves  the  power  to  destroy  the  companies  and  thus 
deprive  the  General  Government  of  the  benefit  of  the 
roads,  for  the  construction  and  maintenance  of  which  its 
grants  were  made;  that  the  existence  and  exercise  of  the 
power  on  the  part  of  the  State  are  therefore  incompatible 
with  the  duties  devolved  upon  and  assumed  by  the  compa- 
nies to  the  United  States.  Hence  it  is  claimed  by  counsel 
that  the  tax  levied  upon  the  franchises  of  the  defendants 
is  illegal  and  void;  and  they  refer  to  numerous  decisions 
of  the  Supreme  Court  which  hold,  in  general  language,that 
an  agency  of  the  United  States,  an  instrumentality  by 
which  the  Federal  Government  discharges  its  obligations 
to  the  people  of  the  country,  cannot  be  taxed  by  any  State 
or  subordinate  authority.  Certainly  no  State  can  impede 
or  embarrass  the  Federal  Government  in  its  operations,  as 
might  be  done  if  it  could  impose  a tax  upon  the  necessary 
means  adopted  for  their  execution;  nor  can  the  Federal 
Government  impede  or  embarrass  the  operations  of  the 
State  governments,  as  it  might  do,  if  it  could  impose  a tax 
upon  the  necessary  means  adopted  by  them  in  the  exercise 
of  their  powers. 

The  two  governments  have  supreme  authority  within 
their  respective  spheres,  and  within  them  neither  can  inter 
fere  with  the  other.  On  this  principle  it  was  held  by  the 
Supreme  Court  that  the  State  could  not  levy  a tax  upon  the 
salary  or  emoluments  of  an  officer  of  the  United  States; 
nor  could  the  United  States  impose  a tax  upon  the  salary 
of  a State  Judge.  ( Dobbins  vs.  Commissioners  of  Erie 
County , 16  Peters,  435;  Collector  vs.  Day , 11  Wall.,  113.) 
Both  officers  were  necessary  agents,  instrumentalities  for 
exercising  the  powers  of  their  respective  governments, 
and  to  tax  the  salary  of  either  was  to  impair  the  means 
by  which  he  could  exist  and  maintain  his  office.  In  both 
cases,  as  observed  by  Mr.  Justice  Nelson,  the  exemption 
from  taxation  was  “ upheld  by  the  great  law  of  self-preser- 


9 


vation,  as  any  government  whose  means  employed  in 
conducting  its  operations  is  subject  to  the  control  of 
another,  can  exist  only  at  the  mercy  of  that  govern- 
ment.” 

The  correctness  of  this  general  principle  is  not  contro- 
verted, and  cannot  be  in  the  face  of  the  numerous  deci- 
sions of  the  Supreme  Court,  when  applied  to  the  means 
or  instrumentalities  created  by  the  Federal  Government, 
or  existing  under  its  laws,  for  the  exercise  of  its  powers,  . 
such  as  officers  of  its  Courts  in  the  administration  of 
justice,  or  fiscal  agents  in  the  collection,  custody,  or 
distribution  of  its  funds.  But  we  are  unable  to  accede 
to  the  position  tliat  every  agent  or  instrument  which 
the  United  States  may  see  fit  to  employ,  is  thereby  ex- 
empted from  the  common  burdens  of  the  State  in 
which  it  may  be  found  or  used,  in  the  absence  of  spe- 
cific Congressional  legislation  declaring  such  exemp- 
tion. The  coach  employed  to  carry  the  mail,  or  the 
ferry-boat  to  convey  it  across  a navigable  stream, 
would  hardly,  by  reason  of  this  employment  alone  as  an 
instrumentality  of  the  General  Government,  be  considered 
as  withdrawn  from  the  taxing  power  of  the  State.  As  well 
observed  by  Chief  Justice  Chase,  with  reference  to  the  ex- 
emption from  State  taxation  claimed  by  the  Kansas  Divi- 
sion of  the  Pacific  Railroad  Company  for  its  property,  no 
limits  can  be  perceived  to  the  principle  of  exemption 
which  the  companies  thus  seek  to  establish.  “ Every  cor- 
poration,” he  added,  “ engaged  in  the  transportation  of 
mails,  or  of  Government  property  of  any  description,  by 
land  or  water,  or  in  supplying  materials  for  the  use  of  the 
Government,  or  in  performing  any  service  of  whatever 
kind,  might  claim  the  benefit  of  the  exemption.  The 
amount  of  property  now  held  by  such  corporations,  and 
having  relations  more  or  less,  direct  to  the  National  Govern- 
ment and  its  service,  is  very  great.  And  this  amount  is 
continually  increasing;  so  that  it  may  admit  of  question 
whether  the  whole  income  of  the  property  which  will 
2 


10 


remain  liable  to  State  taxation,  if  the  principle  contended 
for  is  admitted  and  applied  in  its  fullest  extent,  may  not 
ultimately  be  found  inadequate  to  the  support  of  the 
State  governments.”  ( Thomson  vs.  Pacific  Railroad , 9 
Wall.,  579,  591.) 

It  is  true,  that  in  the  case  from  which  this  citation  is 
made,  exemption  from  taxation  was  claimed  only  for  the 
property,  the  road  and  rolling-stock  of  the  Company. 

4 Here  the  exemption  claimed  is  of  the  franchises  of  the 
corporations,  their  right  to  exist  and  maintain  their  roads. 
But  it  is  not  perceived  that  this  difference  between  the 
cases  can  affect  the  rule  which  was  the^  laid  down,  that 
unless  Congress  interposes  and  creates  the  exemption,  the 
taxing  power  of  the  State  is  not  restrained;  for  if  the 
roads  and  rolling-stock  can  be  taxed,  and,  if  the  taxes  are 
not  paid,  can  be  sold,  the  ability  of  the  companies  to  dis- 
charge their  obligations  as  agents  of  the  Government, 
would  be  as  effectually  destroyed,  as  by  the  taxation  and 
sale  of  their  franchises.  The  possession  of  the  roads  and 
rolling-stock  is  as  essential  as  the  possession  of  the  fran- 
chises. 

The  objection  presented  by  counsel  is  not  free  from 
difficulty.  At  one  time  I thought  that  it  was  tenable,  and 
so  expressed  myself  by  joining  in  the  dissent  in  Railroad 
Company  vs.  Peniston , reported  in  18  Wallace;  but  on 
further  consideration,  I have  come  to  the  conclusion  that 
the  rule  laid  dowm  in  Thomson’s  Case  is  the  true  and 
sound  rule.  The  State,  it  is  conceded,  cannot  use  its  tax- 
ing power  so  as  to  defeat  or  burden  the  operations  of  the 
General  Government;  and  when  that  Government  has 
itself  created  the  instrumentality  used,  its  exemption  from 
State  taxation  necessarily  follows.  But  we  are  of  opinion, 
yielding  to  the  decision  cited,  that  when  the  instrumentality 
is  the  creation  of  the  State — a corporation  formed  under  its 
laws — and  is  employed  or  adopted  by  the  General  Govern- 
ment for  its  convenience,  although  to  enlarge  its  use  and 
render  it  more  available  additional  privileges  and  benefits 


11 


are  conferred  by  that  Government  upon  the  corporation,  it 
remains  subject  to  the  taxing  power  of  the  State,  unless 
Congress  declares  it  to  be  exempt  from  such  power.  Con- 
gress can  undoubtedly  exempt  any  agencies  it  may  employ 
for  services  to  the  General  Government  from  such  taxation 
as  will  in  its  judgment  impede  or  prevent  their  perform- 
ance. Occasions  may  arise  hereafter,  especially  in  time  of 
war,  where  the  necessities  of  the  Federal  Government 
will  require  such  exemption  of  the  roads  of  the  companies 
and  of  their  franchises  and  appurtenances  to  be  declared 
and  enforced,  the  exemption  to  continue  until  the  necessi- 
ties calling  for  it  shall  cease.  But  as  yet  Congress  has  not 
declared  any  such  exemption  either  of  their  property  or 
of  their  franchises;  and  we  therefore  think  that  none 
exists. 

Of  the  other  defences  interposed  to  the  claim  of  the 
plaintiffs,  some  are  founded  upon  an  alleged  neglect  of  the 
assessing  officers  to  comply  with  the  requirements  of  the 
laws  of  the  State,  and  some  upon  the  alleged  conflict  of 
provisions  of  the  State  Constitution,  under  which  they 
acted,  with  requirements  of  the  Federal  Constitution.  Of 
the  former  are  objections  to  what  is  termed  the  lumping 
character  of  the  assessment,  that  is,  the  blending  of  the 
different  items  composing  the  whole  into  one  valuation, 
namely,  the  value  of  the  franchise,  roadway,  roadbed,  rails 
and  rolling-stock,  without  any  designation  of  the  value  of 
each  distinct  part;  and  to  the  including  in  the  roadway  of 
property  not  properly  appertaining  to  it,  such  as  fences  on 
its  sides  belonging  to  adjoining  proprietors;  and,  so  far  as 
the  roadway  of  the  Central  Pacific  Company  is  concerned, 
to  the  including  in  the  estimate  of  its  length  the  four  miles 
of  the  bay  between  the  road  in  the  county  of  San  Fran- 
cisco and  the  wharf  in  Alameda  County.  The  value  of 
the  fences  is  included  in  the  valuation  of  the  roadway  of 
each  company.  The  distance  across  the  bay  of  San  Fran- 
cisco is  added  to  the  length  of  the  road  assessed  to  the  Cen- 
tral Pacific  Company,  and  is  assessed  as  of  equal  value  per 


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mile  with  the  rest  of  the  road.  It  is  also  contended  that 
the  land  composing  the  roadway,  and  the  rails  laid  thereon, 
should  have  been  separately  assessed;  the  latter  as  improve- 
ments under  the  Constitution  of  the  State,  which  requires 
“ land  and  improvements  thereon  ” to  be  separately  as- 
sessed. An  objection  is  also  taken  to  those  cases  in  which 
the  people  of  the  State  are  plaintiffs,  that  the  statute  un- 
der which  they  wTere  brought  was  repealed  in  1880,  and 
that  after  that  period  actions  for  unpaid  taxes  could  be 
brought  only  in  the  name  of  the  county.  We  do  not, 
however,  deem  it  important  to  pass  upon  these  and  other 
objections  to  the  assessment,  arising  from  an  alleged  disre- 
gard of  the  laws  of  the  State.  We  shall  confine  ourselves 
to  the  defences  made  to  the  assessment  and  tax  from  the 
alleged  conflict  of  the  provisions,  under  which  they  were 
levied,  with  the  requirements  of  the  Fourteenth  Amend- 
ment to  the  Constitution  of  the  United  States,  which  de- 
clares that  no  State  shall  “ deprive  any  person  of  life, 
liberty,  or  property  without  due  process  of  law,  nor  deny  to 
any  person  within  its  jurisdiction  the  equal  protection  of 
the  laws.”  The  railroad  companies  contend  that  both  in- 
hibitions of  this  amendment  were  violated  in  the  assess- 
ment and  taxation  of  their  property. 

The  Constitution  of  California  provides  for  taxes  on 
property,  on  incomes,  and  on  polls.  The  taxation  on  prop- 
erty, with  which  alone  we  are  concerned  in  this  case,  is  to 
be  in  proportion  to  its  value.  There  is  no  provision  for 
levying  a specific  tax  upon  any  article  or  kind  of  property. 
It  declares  that  all  property,  not  exempt  under  the  laws  of 
the  United  States,  shall,  with  some  exceptions,  be  taxed 
according  to  its  value,  to  be  ascertained  as  prescribed  by 
law;  and  that  the  word  “ property  ” shall  “ include  moneys, 
credits,  bonds,  stocks,  dues,  franchises,  and  all  other  matters 
and  things,  real,  personal,  and  mixed,  capable  of  private 
ownership.” 

It  also  declares  that  a “ mortgage,  deed  of  trust,  con- 
tract, or  other  obligation  by  which  a debt  is  secured,  shall , 


13 


for  the  purposes  of  assessment  and  taxation , be  deemed  and 
treated  as  an  interest  in  the  property  affected  thereby .”  And 
that,  “ except  as  to  railroads  and  other  quasi  public  corporations , 
in  case  of  debts  so  secured,  the  value  of  the  property 
affected'  by  such  mortgage,  deed  of  trust,  contract,  or  ob- 
ligation, less  the  value  of  such  security,  shall  be  assessed 
and  taxed  to  the  owner  of  the  property,  and  the  value  of 
such  security  shall  be  assessed  and  taxed  to  the  owner 
thereof.”  It  also  provides  that  “ the  taxes  so  levied  shall 
be  a lien  upon  the  property  and  security,  and  may  be  paid 
by  either  party  to  such  security;  if  paid  by  the  owner  of 
the  security,  the  tax  so  levied  upon  the  property  affected 
thereby  shall  become  a part  of  the  debt  so  secured ; if  the 
owner  of  the  property  shall  pay  the  tax  so  levied  on  such 
security,  it  shall  constitute  a payment  thereon,  and  to  the 
extent  of  such  payment  a full  discharge  thereof.” 

By  the  Constitution  not  only  is  the  ad  valorem,  rule  estab- 
lished for  the  taxation  of  property,  but  provision  is  also 
made  for  its  assessment.  The  franchise,  roadway,  road- 
bed, rails,  and  rolling-stock  of  railroads  operated  in  more 
than  one  county  are  to  be  assessed  by  a special  board, 
termed  the  State  Board  of  Equalization.  All  other  prop- 
erty is  to  be  assessed  in  the  county  in  which  it  is  situated. 
The  Supervisors  of  each  county  are  constituted  a Board  of 
Equalization  of  such  taxable  property,  and  must  act  upon 
prescribed  rules  of  notice  to  its  owners.  The  State  Board 
is  authorized  to  act  not  only  as  assessor  of  the  franchise, 
roadway,  roadbed,  rails,  and  rolling-stock  of  the  railroads 
mentioned,  hut  as  a Board  of  Equalization  of  the  taxable 
property  in  the  several  counties,  so  that  equality  may  be 
secured  between  the  tax-payers  of  different  localities.  Its 
action  in  this  latter  character  must  also  be  upon  prescribed 
rules  of  notice.  But  though  the  officers  by  whom  the 
assessment  of  these  properties  is  to  he  made  be  different, 
the  properties  are  subject  to  the  same  rule  of  taxation; 
that  is,  they  are  to  be  taxed  in  proportion  to  their  value. 
In  fixing,  however,  the  liabilities  of  parties  to  pay  the  tax 


14 


assessed  and  levied  upon  properties  subject  to  a mortgage, 
and  in  estimating  the  value  of  such  properties  as  the 
foundation  for  the  tax,  a discrimination  is  made  between  the 
property  held  by  railroad  and  quasi  public  corporations,  and 
that  held  by  natural  persons  and  other  corporations.  A 
mortgage,  as  seen  by  the  provisions  of  the  Constitution 
quoted  above,  is  deemed  and  treated,  for  the  purposes  of 
assessment  and  taxation,  as  an  interest  in  the  property 
affected.  At  common  law  a mortgage  of  property  is  a 
conveyance  of  the  title,  subject  to  a condition  that  if  the 
debt  secured  be  paid  as  stipulated  the  conveyance  is  to 
become  inoperative.  Until  the  debt  secured  is  paid,  the 
title  is  in  the  mortgagee.  By  the  Constitution,  a mort- 
gage, for  the  purposes  of  assessment  and  taxation,  operates 
in  like  manner  to  transfer  the  mortgagor’s  interest  to  the 
extent  represented  by  the  amount  secured.  If  such  amount 
be  half  the  value  of  the  property,  the  taxable  interest  of 
the  mortgagee  is  an  undivided  half  interest  in  the  property; 
if  the  amount  equal  or  exceed  the  whole  value  of  the  prop- 
erty, the  taxable  interest  of  the  mortgagee  embraces  the 
entire  property.  The  value  of  the  security  can  never  ex- 
ceed the  value  of  the  property  mortgaged;  it  may  be  less, 
and  is  so  if  the  amount  secured  be  less  than  such  value. 

How,  under  the  Constitution,  when,  by  the  execution 
of  a mortgage,  a taxable  interest  in  the  property  held  by 
natural  persons  or  by  corporations  other  than  railroad  or 
quasi  public,  is  transferred  by  the  owner  to  another  party, 
or  the  whole  taxable  interest  is  vested  in  him,  the  holder 
alone  of  such  interest  is  taxed  for  it.  It  is  assessed  against 
him  as  the  owner  of  it,  and  against  him  alone  could  it  be 
justly  assessed.  But  when,  by  a mortgage  on  the  property 
of  a railroad  or  a quasi  public  corporation,  a taxable  interest 
in  such  property  is  transferred  by  the  corporation  to 
another,  or  the  whole  interest  is  vested  in  him,  the  holder 
of  such  interest  is  exempted  from  taxation  for  it,  and  the 
corporation  is  assessed  and  taxed  for  it,  notwithstanding 
the  transfer.  Ho  account  is  taken  of  the  transfer  of  the 


15 


taxable  interest  in  the  estimate  of  the  value  of  the  prop- 
erty. It  is  still  assessed  and  taxed  to  the  original  holder. 

The  discrimination  thus  made  will  more  clearly  appear 
by  an  illustration  of  the  practical  operation  of  the  pro- 
visions. If,  for  example,  A,  owning  property  worth  $20,- 
000,  should  execute  a mortgage  thereof  to  the  Nevada 
Bank,  in  San  Francisco,  to  secure  $10,000,  the  bank 
would  hold  a taxable  interest  in  that  property  to  the 
amount  of  an  undivided  half.  Its  liability  for  taxation 
would  be  precisely  as  though  an  absolute  conveyance  of  an 
undivided  half  interest  had  been  made  to  it.  And  the 
Constitution,  as  seen  above,  requires  that  each  owner 
shall  pay  the  tax  on  his  separate  interest;  and  if  he  pay 
the  tax  chargeable  on  the  interest  of  the  other,  he  shall 
be  allowed  for  it,  either  by  an  addition  to  the  mortgage 
debt,  or  a discharge  of  a portion  of  that  debt  according 
as  he  is  the  one  or  the  other  party  to  the  security.  No 
one  would  pretend  that  the  mortgagor  should  pay  with- 
out such  allowance  the  tax  chargeable  to  the  bank,  nor 
that  the  bank  should  pay  the  tax  chargeable  to  the 
mortgagor,  except  upon  like  condition.  It  would  be  diffi- 
cult to  state  any  principle  which  would  justify  the  exac- 
tion from  one  of  a tax  leviable  on  the  interest  of  the 
other.  No  power  in  any  State  has  ever  been  asserted 
going  to  that  extent,  except  the  power  to  confiscate. 
The  exaction  would  not  be  the  taking  of  property  by 
due  process  of  law,  even  upon  the  theories  as  to  what 
constitutes  such  process  asserted  in  this  case;  it  would 
be  sheer  spoliation  by  arbitrary  power. 

If,  however,  a railroad  corporation  should  execute  its 
mortgage  to  the  Nevada  Bank  to  secure  a loan  equal 
to  half  or  the  whole  of  the  value  of  its  property,  and' 
thus  transfer  to  the  bank  a portion  or  the  whole  of  its 
taxable  interest  in  the  property,  that  which  is  thus  con- 
demned as  sheer  spoliation  would  be  enforced,  if  effect 
be  given  to  the  Constitution  as  it  is  written.  The  tax- 
able interest  in  that  case  held  by  the  bank  would  not  be 


16 


assessed  nor  taxed  to  the  bank.  If  the  mortgage  should 
he  for  half  of  the  value  of  the  property,  the  railroad 
company  would  still  have  to  p&v  the  tax  on  the  interest 
transferred,  and  would  not  be  allowed  any  credit  on  the 
mortgage  for  the  amount  paid.  If  the  mortgage  should 
be  equal  to  or  exceed  the  whole  value  of  the  property,  the 
railroad  company,  which  would  not  in  such  a case  hold 
any  taxable  interest  in  the  property — no  more  than  if  it  had 
been  previously  transferred  by  an  absolute  conveyance — 
would  still  be  required  to  pay  the  tax  upon  it,  and  with- 
out any  credit  for  the  payment.  On  what  principle,  or 
by  what  species  of  reasoning  a tax  upon  property  can  be 
upheld  and  enforced  against  a party,  be  the  party  a 
natural  or  an  artificial  person,  when  the  taxable  interest 
in  it  had,  at  the  time  of  the  levy  of  the  tax,  been  trans- 
ferred to  another,  I am  at  a loss  to  understand.  This  posi- 
tion of  the  case  was  suggested  to  counsel  on  more  than 
one  occasion  during  the  argument;  but  no  answer  was 
made  to  it.  To  every  other  position  an  answer  was 
attempted,  but  to  this  one  none;  and,  as  we  think,  for  the 
best  of  reasons,  because  none  was  possible,  unless  indeed  it 
be  held  that  the  Constitution  does  not  mean  what  in 
express  language  it  declares,  that  a mortgage  “ shall  for 
the  purposes  of  assessment  and  taxation  he  deemed  and  treated 
as  an  interest  in  the  property  affected  thereby .” 

Under  the  provisions  of  the  Constitution  cited,  the 
property  of  the  several  railroad  companies,  defendants 
in  these  cases,  was  assessed  and  taxed;  and  in  such  assess- 
ment and  taxation,  all  the  injurious  discriminations  men- 
tioned were  applied  against  the  companies,  as  will  ap- 
pear by  a statement  of  the  proceedings.  In  considering 
them,  it  will  tend  to  clearness  and  brevity,  if  we  confine 
what  we  have  to  say  principally  to  the  case  of  Santa 
Clara  County  against  the  Southern  Pacific  Railroad  Com- 
pany. The  circumstances  distinguishing  the  other  cases 
from  it  do  not  affect  the  questions  involved. 

The  Southern  Pacific  Railroad  Company  operates  a rail- 


17 


road  through  several  counties.  The  entire  length  of  the 
road  is  somewhat  over  711  miles,  of  which  59  miles 
and  three-tenths  of  a mile  are  in  the  county  of  Santa 
Clara.  The  principal  place  of  business  of  the  company  is 
in  the  city  of  San  Francisco.  Its  stockholders  are  citizens 
of  the  United  States,  some  of  whom  reside  in  California 
and  some  in  other  States.  On  the  1st  of  April,  1875,  it 
was  indebted  to  divers  persons  in  large  sums  of  money 
advanced  for  the  construction  and  equipment  of  its  road; 
and  to  secure  this  indebtedness  and  to  complete  the  con- 
struction and  equipment,  it  executed  and  delivered  to 
certain  parties,  D.  0.  Mills  and  Lloyd  Tevis,  of  the  city 
and  county  of  San  Francisco,  a mortgage  upon  its  road, 
franchises,  rolling-stock  and  appurtenances,  and  upon  a 
large  number  of  tracts  of  land,  situated  in  different 
counties,  aggregating  over  11,000,000  acres,  which  were 
the  property  of  the  company.  The  indebtedness  amounted 
to  the  sum  of  $32,520,000,  and  consisted  of  various  bonds 
of  the  company.  A portion  of  these  bonds,  amounting  to 
about  $1,632,000,  has  been  paid;  and  so  has  the  accruing 
interest  on  all  of  them.  The  balance  of  the  bonds,  amount- 
ing to  about  $30,898,000,  remains  a subsisting  indebted- 
ness. This  mortgage  was  soon  afterwards  placed  on  record 
in  the  office  of  the  Recorder  of  Deeds  in  the  several 
counties  of  the  State  in  which  the  property  is  situated. 

The  State  Board  of  Equalization  assessed  the  franchise, 
roadway,  roadbed,  rails,  and  rolling-stock  of  that  portion 
of  the  road  which  is  designated  as  its  Main  Branch,  being 
160 rVo-  miles  in  length,  at  $2,412,600,  making  $15,000  a 
mile,  and  apportioned  to  the  county  of  Santa  Clara  $889,- 
500.  Upon  this  amount  thus  assessed  and  apportioned, 
the  taxes  were  levied  for  which  the  action  of  that  county 
is  brought.  Another  portion  of  the  road,  designated  as 
the  Southern  Division,  w7as  assessed  in  a similar  manner, 
and  the  amount  apportioned  to  the  different  counties 
through  which  the  road  passed.  In  making  the  assess- 
ment of  the  different  portions,  no  deduction  was  allowed 


18 


for  the  mortgage  thereon.  No  account  was  taken  of  the 
mortgage;  it  was  not  treated  as  an  interest  in  the  property, 
nor  as  affecting  in  any  way  the  liability  of  the  mortgagor 
for  the  tax.  If  a natural  person  had  executed  the  mort- 
gage, it  being  for  an  amount  exceeding  the  value  of  the 
property,  the  whole  taxable  interest  would  have  been 
treated  as  in  the  mortgagees,  and  they  alone  would  have 
been  assessed  and  taxed;  they  alone.would  have  been  held 
amenable  to  a personal  action  for  the  taxes.  If  the  mort- 
gagor had  paid  the  taxes  to  prevent  a sale  of  the  property, 
the  amount  paid  would  have  been  credited  on  the  mort- 
gage. It  can  hardly  require  further  illustration  to  show 
the  discrimination  against  railroad  companies  in  the 
matter  of  taxation,  where  property  is  subject  to  a mort- 
gage. Hot  only  is  the  company  taxed  in  such  a case  for 
interests  it  does  not  possess,  but  it  is  not  allowed  any  credit 
by  those  who  do  possess  the  interests  for  the  amount 
exacted. 

The  same  discrimination  will  appear  against  railroad 
companies  in  the  taxation  of  their  property,  if  we  treat 
mortgages  thereon,  not  as  interests  in  the  property,  which  the 
Constitution  declares  they  shall  be  deemed  and  treated  to 
be,  but  as  mere  liens  or  incumbrances  thereon.  The  basis  of 
all  ad  valorem  taxation  is  necessarily  the  assessment  of  the 
property,  that  is,  the  estimate  of  its  value.  Whatever  af- 
fects the  value  necessarily  increases  or  diminishes  the  tax 
proportionately.  If,  therefore,  any  element  which  is  taken 
into  consideration  in  the  valuation  of  the  property  of  one 
party  be  omitted  in  the  valuation  of  the  property  of  an- 
other, a discrimination  is  made  against  the  one  and  in  favor 
of  the  other,  which  destroys  the  uniformity  so  essential  to  all 
just  and  equal  taxation.  Such  an  element  exists  where  in 
the  assessment  of  property  subject  to  a mortgage,  the  value 
of  the  mortgage  is  deducted  if  the  property  be  owned  by  a 
natural  person',  and  is  not  deducted  if  owned  by  a railroad 
corporation.  And  the  Constitution  of  the  State  declares  that 
in  the  ascertainment  of  values  as  the  basis  of  taxation  such 


19 


deduction  shall  be  allowed  in  the  one  case  and  denied  in 
the  other.  Instances  of  every-day  occurrence  will  show 
the  effect  of  this  discrimination  in  a clear  light.  A nat- 
ural person  and  a railroad  company  own  together  a parcel 
of  property  in  equal  proportions  subject  to  a mortgage. 
In  estimating  the  value  of  the  undivided  half  belonging 
to  the  natural  person,  half  of  the  amount  of  the  mortgage 
is  deducted.  In  estimating  the  value  of  the  undivided 
half  belonging  to  the  railroad  company,  no  part  of  the 
mortgage  is  deducted.  The  discrimination  is  made  against 
the  company,  for  no  other  reason  than  its  ownership.  Take 
another  instance:  a natural  person  and  a railroad  company 
own  tracts  of  land  adjoining  each  other, of  the  same  quan- 
tity and  of  equal  fertility  and  richness,  both  being  subject 
to  a mortgage.  In  the  estimate  of  the  value  of  the  prop- 
erty belonging  to  the  natural  person  the  amount  of  the 
mortgage  is  deducted;  in  the  estimate  of  the  value  of  the 
property  belonging  to  the  railroad  company  the  mortgage 
is  not  deducted.  Of  course,  the  valuation  of  the  latter, 
and  consequent  tax  is  proportionately  increased;  and  this 
discrimination  is  made  solely  because  of  the  ownership  of 
the  property.  Should  these  two  owners  exchange  their 
lands,  the  valuation  made  would  change  with  the  owner- 
ship. Should  the  railroad  company  sell  its  tract  to  an  in- 
dividual, the  assessing  officers  would  at  once  be  bound  to 
return  a different  valuation  of  the  property  as  a basis  for 
taxation.  Every  one  sees  that  the  valuation  has  not  in 
fact  changed  with  the  ownership,  and,  therefore,  that  the 
discrimination  is  made  solely  because  a rule  is  adopted  in 
the  assessment  of  the  property  of  one  party  different  from 
that  applied  in  the  assessment  of  the  property  of  the  other, 
purely  on  account  of  its  ownership.  A corresponding  dif- 
ference in  the  tax  which  the  different  owners  must  pay 
follows  the  assessment.  Thus,  if  two  adjoining  tracts  are 
subject  to  a mortgage  each  for  half  its  value,  the  natural 
person  owning  one  of  them  pays  a tax  on  the  other  half, 
while  the  corporation  must  pay  a tax  on  the  whole  of  its 


‘20 


tract,  that  is,  double  the  tax  of  the  individual.  Thus,  if 
each  tract  be  worth  $100,000,  subject  to  a mortgage  of 
$50,000,  and  the  rate  of  taxation  be  two  per  cent.,  the  tax 
of  the  individual  will  be  $1,000;  the  tax  of  the  corpora- 
tion will  be  $2,000.  If,  then,  these  owners  should  ex- 
change their  lands,  the  property  which  this  year  is  thus 
taxed  at  $1,000,  will  next  year  be  tgxed  at  double  the 
amount;  and  the  other  tract,  this  year  taxed  at  $2,000, 
will  next  year  be  taxed  at  one-half  that  sum.  The  prop- 
erty which  is  now  half  exempt  will  then  be  subject  to  tax- 
ation to  its  full  value;  and  that  which  is  now  taxable  at 
its  full  value  will  then  be  half  exempt;  and  all  this  change 
in  valuation  without  any  change  in  the  character  or  use 
of  the  property,  but  solely  on  account  of  the  change  in 
its  ownership. 

The  principle  which  sanctions  the  elimination  of  one 
element  in  assessing  the  value  of  property  held  by  one 
party,  and  takes  it  into  consideration  in  assessing  the  value 
of  property  held  by  another  party,  would  sanction  the 
assessment  of  the  property  of  one  at  less  than  its  value— 
at  a half  or  a quarter  of  it — and  the  property  of  another  at 
more  than  its  value — at  double  or  treble  of  it — according 
to  the  will  or  caprice  of  the  State.  To-day,  railroad  com- 
panies are  under  its  ban,  and  the  discrimination  is  against 
their  property.  To-morrow,  it  may  he  that  other  institu- 
tions will  incur  its  displeasure.  If  the  property  of  rail- 
road companies  may  be  thus  sought  out  and  subjected  to 
discriminating  taxation,  so,  at  the  will  of  the  State  by  a 
change  of  its  Constitution,  may  the  property  of  churches, 
of  universities,  of  asylums,  of  savings  banks,  of  insurance 
companies,  of  rolling  and  flouring  mill  companies,  of 
mining  companies,  indeed  of  any  corporate  companies  ex- 
isting in  the  State.  The  principle  which  justifies  such  a 
discrimination  in  assessment  and  taxation,  where  one  of 
the  owners  is  a railroad  corporation  and  the  other  a natu- 
ral person,  would  also  sustain  it  where  both  owners  are 
natural  persons.  A mere  change  in  the  State  Constitution 
would  effect  this  if  the  Federal  Constitution  does  not  for- 


21 


Bid  it.  Any  difference  between  the  owners,  whether  of 
age,  color,  or  race,  or  sex,  which  the  State  might  designate 
would  be  a sufficient  reason  for  the  discrimination.  It  would 
be  a singular  comment  upon  the  weakness  and  character  of 
our  republican  institutions,  if  the  valuation  and  consequent 
taxation  of  property  could  vary  according  as  the  owner  is 
white,  or  black,  or  yellow,  or  old,  or  young,  or  male,  or 
female.  A classification  of  values  for  taxation  upon  any 
such  ground  would  be  abhorrent  to  all  notions  of  equality 
of  right  among  men.  Strangely  indeed  would  the  law 
sound  in  case  it  read  that  in  the  assessment  and  taxation  of 
property,  a deduction  should  be  made  for  mortgages 
thereon  if  the  property  be  owned  by  white  men  or  by  old 
men,  and  not  deducted  if  owned  by  black  men  or  by  young 
men;  deducted  if  owned  by  landsmen,  not  deducted  if 
owned  by  sailors;  deducted  if  owned  by  married  men,  not 
deducted  if  owned  by  bachelors;  deducted  if  owned  by  men 
doing  business  alone,  not  deducted  if  owned  by  men  do- 
ing business  in  partnerships  or  other  associations;  deducted 
if  owned  by  trading  corporations,  not  deducted  if  owned 
by  churches  or  universities;  and  so  on,  making  a discrim- 
ination whenever  there  was  any  difference  in  the  charac- 
ter, or  pursuit,  or  condition  of  the  owner.  To  levy  taxes 
upon  a valuation  of  property  thus  made  is  of  the  very 
essence  of  tyranny,  and  has  never  been  done  except  by 
bad  governments  in  evil  times,  exercising  arbitrary  and 
despotic  power. 

Until  the  adoption  of  the  Fourteenth  Amendment,  there 
was  no  restraint  to  be  found  in  the  Constitution  of  the 
United  States  against  the  exercise  of  such  power  by  the 
States.  In  many  particulars  the  States  were  previously 
limited;  their  sovereignty  was  a restricted  one.  They 
could  not  declare  war,  nor  make  treaties  of  peace.  They 
could  not  enter  into  compacts  with  each  other.  They 
could  not  pass  a bill  of  attainder,  nor  an  ex  post  facto  law, 
nor  a law  impairing  the  obligation  of  contracts.  They 
could  not  interfere  with  the  exercise  of  the  powers,  nor 


22 


obstruct  the  laws  of  the  Federal  Government.  But  in 
many  other  particulars  the  power  of  the  States  was  su- 
preme, subject  to  no  control  by  the  Constitution  of  the 
United  States.  The  original  amendments  were  only  lim- 
itations upon  the  Federal  Government,  and  did  not  affect 
the  States.  Among  the  powers  still  held  by  the  States 
was  the  power  of  taxation.  When  not  interfering  with 
any  power  or  purpose  or  agent  of  the  Federal  Govern- 
ment, there  was  no  limitation  upon  its  exercise.  Except 
as  restrained  by  their  own  Constitutions,  the  States  might 
impose  taxes  upon  any  property  within  their  jurisdiction, 
and,  as  said  in  the  Delaioare  Tax  Case  (18  Wall.,  231),  the 
manner  in  which  its  value  was  assessed  and  the  rate  of 
taxation,  however  arbitrary  or  capricious,  were  mere  mat- 
ters of  legislative  discretion  • and  it  was  not  for  the  Court  to 
suggest  in  any  case  that  a more  equitable  mode  of  assess- 
ment or  rate  of  taxation  might  be  adopted  than  the  one 
prescribed  by  the  Legislature  of  the  State. 

The  first  section  of  the  Fourteenth  Amendment  places 
a limit  upon  all  the  powers  of  the  State,  including  among 
others  that  of  taxation.  After  stating  that  all  persons 
born  or  naturalized  in  the  United  States,  and  subject  to 
the  jurisdiction  thereof,  are  citizens  of  the  United  States 
and  of  the  State  in  which  they  reside,  it  declares  that 
“ no  State  shall  make  or  enforce  any  law  which  shall 
abridge  the  privileges  or  immunities  of  citizens  of  the 
United  States;  nor  shall  any  State  deprive  any  person 
(dropping  the  designation  citizen)  of  life,  liberty,  or  prop- 
erty without  due  process  of  law,  nor  deny  to  any  person 
within  its  jurisdiction  the  equal  protection  of  the  laws.” 
The  amendment  was  adopted  soon  after  the  close  of  the 
civil  war,  and  undoubtedly  had  its  origin  in  a purpose  to 
secure  the  newly  made  citizens  in  the  full  enjoyment  of 
their  freedom.  But  it  is  in  no  respect  limited  in  its  ope- 
ration to  them. , It  is  universal  in  its  application,  extend- 
ing its  protective  force  over  all  men  of  every  race  and 
color,  within  the  jurisdiction  of  the  States  throughout  the 


23 


broad  domain  of  the  Republic.  A constitutional  pro- 
vision is  not  to  be  restricted  in  its  application  because 
designed  originally  to  prevent  an  existing  wrong.  Such 
a restricted  interpretation  was  urged  in  the  Dartmouth 
College  Case , to  prevent  the  application  of  the  provision 
prohibiting  legislation  by  States  impairing  the  obligation 
of  contracts  to  the  charter  of  the  college,  it  being  con- 
tended that  the  charter  was  not  such  a contract  as  the  pro- 
hibition contemplated.  Chief  Justice  Marshall,  however, 
after  observing  that  it  was  more  than  possible  that  the  pres- 
ervation of  rights  of  that  description  was  not  particularly 
in  view  of  the  framers  of  the  Constitution  when  that  clause 
was  introduced,  said:  “ It  is  not  enough  to  say  that  this 
particular  case  was  not  in  the  mind  of  the  convention 
when  the  article  was  framed,  nor  of  the  American  people 
when  it  was  adopted.  It  is  necessary  to  go  further,  and 
to  say  that,  had  this  particular  case  been  suggested,  the 
language  would  have  been  so  varied  as  to  exclude  it,  or  it 
would  have  been  made  a special  exception.  The  case 
being  within  the  words  of  the  rule,  must  be  within  its  op- 
eration likewise,  unless  there  he  something  in  the  literal 
construction  so  obviously  absurd  or  mischievous,  or  repug- 
nant to  the  general  spirit  of  the  instrument,  as  to  justify 
those  who  expound  the  Constitution  in  making  it  an  ex- 
ception.” (4  Wheat.,  494.)  All  history  shows  that  a par- 
ticular grievance  suffered  by  an  individual  or  a class,  from 
a defective  or  oppressive  law,  or  the  absence  of  any  law 
touching  the  matter,  is  often  the  occasion  and  cause  for 
enactments,  constitutional  or  legislative,  general  in  their 
character,  designed  to  cover  cases  not  merely  of  the  same, 
but  all  cases  of  a similar  nature.  The  wrongs  which  were 
supposed  to  be  inflicted  upon  or  threatened  to  citizens  of 
the  enfranchised  race,  by  special  legislation  directed 
against  them,  moved  the  framers  of  the  amendment  to 
place  in  the  fundamental  law  of  the  nation  provisions  not 
merely  for  the  security  of  those  citizens,  but  to  insure  to  all 
men,  at  all  times  and  at  all  places,  due  process  of  law,  and 


24 


the  equal  protection  of  the  laws.  Oppression  of  the  per- 
son and  spoliation  of  property  by  any  State  were  thus  for- 
bidden, and  equality  before  the  law  was  secured  to  all.  In 
the  argument  of  the  San  Mateo  Case  in  the  Supreme  Court, 
Mr.  Edmunds,  who  was  a member  of  the  Senate  when  the 
amendment  was  discussed  and  adopted  by  that  body, 
speaking  of  its  broad  and  catholic  spirit,  said:  “ There  is 
no  word  in  it  that  did  not  undergo  the  completest  scrutiny. 
There  is  no  word  in  it  that  was  not  scanned,  and  intended 
to  mean  the  full  and  beneficial  thing  that  it  seems  to 
mean.  There  was  no  discussion  omitted;  there  was  no 
conceivable  posture  of  affairs  to  the  people  who  had  it  in 
hand,”  which  was  not  considered.  And  the  purpose  of 
this  long  and  anxious  consideration  was  that  protection 
against  injustice  and  oppression  should  be  made  forever 
secure — to  use  his  language — secure,  not  according  to 
the  passion  of  Vermont,  or  of  Rhode  Island,  or  of  Califor- 
nia, depending  upon  their  local  tribunals  for  its  efficient 
exercise — but  secure  as  the  right  of  a Roman  was  secure, 
in  every  province  and  in  every  place,  and  secure  by  the 
judicial  power,  the  legislative  power,  and  the  executive 
power  of  the  whole  body  of  the  States  and  the  whole  body 
of  the  people.” 

With  the  adoption  of  the  amendment  the  power  of  the 
States  to  oppress  any  one  under  any  pretence,  or  in  any 
form,  was  forever  ended;  and  henceforth  all  persons  within 
their  jurisdiction  could  claim  equal  protection  under  the 
laws.  And  by  equal  protection  is  meant  equal  security 
to  every  one  in  his  private  rights — in  his  right  to  life,  to 
liberty,  to  property,  and  to  the  pursuit  of  happiness.  It 
implies  not  only  that  the  means  which  the  laws  afford  for 
such  security  shall  be  equally  accessible  to  him,  but  that 
no  one  shall  be  subject  to  any  greater  burdens  or  char- 
ges than  such  as  are  imposed  upon  all  others  under 
like  circumstances.  This  protection  attends  every  one 
everywhere,  whatever  be  his  position  in  society  or  his  as- 
sociation with  others,  either  for  profit,  improvement,  or 


pleasure.  It  does  not  leave  him  because  of  any  social  or 
official  position  which  he  may  hold,  nor  because  he  may 
belong  to  a political  body,  or  to  a religious  society,  or  be 
a member  of  a commercial,  manufacturing,  or  transporta- 
tion company.  It  is  the  shield  which  the  arm  of  our  blessed 
Government  holds  at  all  times  over  every  one,  man, 
woman,  and  child,  in  all  its  broad  domain,  wherever  they 
may  go  and  in  whatever  relations  they  may  be  placed. 
~No  State — such  is  the  sovereign  command  of  the  whole 
people  of  the  United  States — no  State  shall  touch  the  life, 
the  liberty,  or  the  property  of  any  person,  however  hum- 
ble his  lot  or  exalted  his  station,  without  due  process  of 
law;  and  no  State,  even  with  due  process  of  law,  shall 
deny  to  any  one  within  its  jurisdiction  the  equal  protec- 
tion of  the  laws. 

Unequal  taxation,  so  far  as  it  can  be  prevented,  is, 
therefore,  with  other  unequal  burdens,  prohibited  by 
the  amendment.  There  undoubtedly  are,  and  always  will 
be,  more  or  less  inequalities  in  the  operation  of  all  gen- 
eral legislation,  arising  from  the  different  conditions  of 
persons,  from  their  means,  business,  or  position  in  life, 
against  which  no  foresight  can  guard.  But  this  is  a very 
different  thing,  both  in  purpose  and  effect,  from  a carefully 
devised  scheme  to  produce  such  inequality;  or  a scheme, 
if  not  so  devised,  necessarily  producing  that  result.  Abso- 
lute equality  may  not  be  attainable,  but  gross  and  designed 
departures  from  it  will  necessarily  bring  the  legislation 
authorizing  it  within  the  prohibition.  The  amendment  is 
aimed  against  the  perpetration  of  injustice,  and  the  exer- 
cise of  arbitrary  power  to  that  end.  The  position  that 
unequal  taxation  is  not  within  the  scope  of  its  prohibitory 
clause  would  give  to  it  a singular  meaning.  It  is  a matter 
of  history  that  unequal  and  discriminating  taxation  levelled 
against  special  classes,  has  been  the  fruitful  means  of  op- 
pressions, and  the  cause  of  more  commotions  and  disturb- 
ance in  society,  of  insurrections  and  revolutions,  than  any 
other  cause  in  the  world.  It  would,  indeed,  as  counsel  in 
8 


26 


the  San  Mateo  Case  ironically  observed,  be  a charming 
spectacle  to  present  to  the  civilized  world,  if  the  amend- 
ment were  to  read  as  contended  it  does  in  law — Nor  shall 
any  State  deprive  any  person  of  his  property  without  due 
process  of  law,  except  it  be  in  the  form  of  taxation — nor  deny 
to  any  person  within  its  jurisdiction  the  equal  protection 
of  the  laws,  except  it  be  by  taxation ” No  such  limitation 
can  be  thus  engrafted  by  implication  upon  the  broad  and 
comprehensive  language  used.  The  power  of  oppression 
by  taxation  without  due  process  of  law  is  not  thus  per- 
mitted; nor  the  power  by  taxation  to  deprive  any  person 
of  the  equal  protection  of  the  laws. 

Soon  after  the  adoption  of  the  amendment,  Congress 
recognized  by  its  legislation  the  application  of  the  prohi- 
bition to  unequal  taxation.  The  original  Civil  Rights  Act, 
previously  passed,  made  persons  of  the  emancipated  race 
citizens,  and  declared  that  all  citizens  of  the  United  States 
of  every  race  or  color  should  have  the  same  rights  in 
every  State  and  Territory  to  make  and  enforce  contracts, 
to  sue,  be  parties,  and  give  evidence;  to  inherit,  purchase, 
lease,  sell,  own,  and  convey  real  and  personal  property, 
and  to  the  benefit  of  all  laws  and  proceedings  for  the  se- 
curity of  persons  and  property,  as  was  enjoyed  by  white 
citizens,  and  should  be  subject  to  like  punishments,  pains 
and  penalties,  and  to  none  other.  After  the  adoption  of  the 
amendment  the  act  was  re-enacted,  and  to  the  clause  that 
all  persons  should  enjoy  the  same  rights  as  white  citizens, 
and  be  subject  to  like  punishments,  pains  and  penalties,  it 
added  and  subject  only  to  like  “ taxes , licenses , and  exactions 
of  every  kind , and  to  no  other.”  The  Congress  which  re-en- 
acted the  Civil  Rights  Act  with  this  addition  was  largely 
composed  of  those  who  had  voted  for  the  amendment;  and 
it  is  well  known  that  oppressions  by  unequal  taxation  were 
the  subject  of  consideration  before  the  Committee  of  the 
two  Houses  Under  whose  direction  the  amendment  was 
proposed.  But  were  this  otherwise,  and  were  the  wrong  of 
such  unequal  taxation  not  prominently  in  the  minds  of  the 


27 


framers,  it  being  within  the  language,  it  must  be  held  to 
be  within  the  operation  of  the  prohibition.  As  truly  and 
eloquently  said  by  Mr.  Conkling,  in  the  argument  of  the 
San  Mateo  Case : “If  it  be  true  that  new  needs  have  come, 
if  it  be  true  that  wrongs  have  arisen  or  shall  arise  which 
the  framers  in  their  forebodings  never  saw;  wrongs  which 
shall  be  righted  by  the  words  they  established;  then  all  the 
more  will  those  words  be  sanctified  and  consecrated  to  hu- 
manity and  progress.” 

The  fact  to  which  counsel  allude,  that  certain  property 
is  often  exempted  from  taxation  by  the  States,  does  not 
at  all  militate  against  this  view  of  the  operation  of  the 
Fourteenth  Amendment  in  forbidding  the  imposition  of 
unequal  burdens.  Undoubtedly  since  the  adoption  of 
that  amendment  the  power  of  exemption  is  much  more 
restricted  than  formerly — but  that  it  may  be  extended 
to  property  used  for  objects  of  a public  nature,  is  not 
questioned — that  is,  where  the  property  is  used  for  the 
promotion  of  the  public  well-being,  and  not  for  any 
private  end.  Thus  property  used  for  public  instruction, 
for  schools,  colleges,  and  universities,  which  are  open  to 
all  applicants  on  similar  conditions,  may  properly  be  ex- 
empted. The  public  benefit  is  the  equivalent  to  the 
State  for  the  tax  which  would  otherwise  be  exacted.  If 
buildings,  used  as  churches  for  public  worship,  are  also 
sometimes  exempted,  it  must  be  because,  apart  from  relig- 
ious considerations,  churches  are  regarded  as  institutions 
established  to  inculcate  principles  of  sound  morality,  lead- 
ing citizens  to  a more  ready  obedience  to  the  laws. 
Whatever  the  exemption,  it  can  only  be  sustained  for  the 
public  service  or  benefit  received.  The  equality  of  protec 
tion  which  the  Fourteenth  Amendment  declares  that  no 
State  shall  deny  to  any  one  is  not  thus  invaded.  That 
amendment  requires  that  exactions  upon  property  for  the 
public  shall  be  levied  according  to  some  common  ratio  to 
its  value,  so  that  each  owner  may  contribute  only  his  just 
proportion  to  the  general  fund.  When  such  exaction  is 


28* 


made  without  reference  to  a common  ratio,  it  is  not  a tax, 
whatever  else  it  may  be  termed;  it  is  rather  a forced  con- 
tribution, amounting  in  fact  to  simple  confiscation.  As 
justly  said  by  the  Supreme  Court  of  Kentucky,  in  the  cel- 
ebrated case  of  Lexington  vs.  McQuillan’s  Heirs , when- 
ever the  property  of  a citizen  is  taken  from  him  by  the 
sovereign  will  and  appropriated  without  his  consent  to  the 
benefit  of  the  public,  the  exaction  should  not  be  consid- 
ered as  a tax  unless  similar  contributions  be  exacted  by 
the  same  public  will  from  such  members  of  the  same  com- 
munity as  own  the  same  kind  of  property;  and,  although 
there  may  be  a discrimination  in  the  subjects  of  taxation, 
still  persons  of  the  same  class  and  property  of  the  same 
kind  must  generally  he  subjected  alike  to  the  same  com- 
mon burden.  (9  Dana,  Ky.,  513.) 

The  cases  of  People  vs.  Weaver  (100  TJ.  S.,  539),  and  of 
Evansville  Bank  vs.  Britton  (105  id.,  322),  will  illustrate 
the  character  of  the  discrimination  of  which  the  defend- 
ants complain.  By  an  Act  of  Congress  passed  in  1864 
and  re-enacted  in  the  Revised  Statutes,  the  shares  in  na- 
tional banks  are  allowed  to  be  included  in  the  valuation 
of  the  personal  property  of  the  owner  in  the  assessment  of 
taxes  imposed  by  authority  of  the  State  in  which  the 
banks  are  located,  subject  to  two  restrictions;  that  the  tax- 
ation shall  not  be  at  a greater  rate  than  is  assessed  upon 
other  moneyed  capital  in  the  hands  of  individual  citizens 
of  the  State,  and  that  the  shares  owned  by  non-residents 
of  the  State  shall  be  taxed  at  the  place  where  the  bank  is 
located.  (R.  S.,  sec.  5219.)  In  People  vs.  Weaver  100 
U.  S.,  539,)  the  meaning  of  these  restrictions  upon  the 
State  was  considered  by  the  Supreme  Court,  and  it  was 
held: 

1st.  That  the  restriction  against  discrimination  has  ref- 
erence to  the  entire  process  of  assessment,  and  includes 
the  valuation  of  the  shares  as  well  as  the  rate  of  percen- 
tage charged  thereon; 

2d.  That  a statute  of  New  York,  which  established  a 


29 


mode  of  assessment  by  which  such  shares  were  valued 
higher  in  proportion  to  their  real  value  than  other  mon- 
eyed capital,  was  in  conflict  with  the  restriction,  although 
no  greater  percentage  was  levied  on  such  valuation  than 
on  other  moneyed  capital;  and, 

3d.  That  a statute  which  permitted  a party  to  deduct 
his  just  debts  from  the  valuation  of  his  personal  property, 
except  so  much  as  consisted  of  those  shares,  taxed  them 
at  a greater  rate  than  other  moneyed  capital,  and  was 
therefore  void  as  to  them. 

The  discrimination  there  condemned,  by  which  an  in- 
creased value  was  given  to  the  shares  of  the  national 
banks  beyond  what  was  given  to  other  moneyed  capital, 
is  a discrimination  similar  to  that  made  by  the  elimina- 
tion of  mortgages  in  estimating  the  value  of  railroad  prop- 
erty in  the  cases  before  us.  In  Evansville  Bank  vs.  Britton , 
the  doctrine  of  this  case  is  approved,  and  it  was  held  that 
the  taxation  of  shares  in  the  national  banks,  under  a stat- 
ute of  Indiana,  without  permitting  the  owner  to  deduct 
from  their  assessed  value  the  amount  of  his  bona-fide  in- 
debtedness, as  he  was  permitted  to  do  in  the  case  of  other 
investments  of  moneyed  capital,  was  a discrimination  for- 
bidden by  the  act  of  Congress. 

That  the  proceeding,  by  which  the  taxes  claimed  in 
these  several  actions  were  levied  against  the  railroad  com- 
panies on  taxable  interests  with  which  they  had  parted, 
was  not  due  process  of  law,  seems  to  me  so  obviously  true 
as  to  require  no  further  illustration.  Any  additional  ar- 
gument would  rather  tend  to  obscure  a truth  which  should 
be  evident  upon  its  simple  statement.  And  if  we  assume 
that  the  mortgage  in  each  case  was  a mere  lien  or  incum- 
brance on  the  property  affected,  and  not  an  interest  in  it, 
as  the  Constitution  declares  it  is,  then  also  is  it  clear  that 
its  elimination  as  an  element  in.  the  valuation  of  the  prop- 
erty of  the  defendants  for  taxation,  while  it  was  consid- 
ered in  the  valuation  of  the  property  of  natural  persons, 
was  a discrimination  against  the  former,  and  led  to  un- 


30 


equal  taxation  against  them.  In  neither  view,  therefore 
was  the  assessment  valid,  and  the  taxation  levied  upon  it 
cannot  be  sustained. 

To  justify  these  discriminating  provisions  and  main- 
tain the  action  in  face  of  them,  the  plaintiffs  have  taken 
positions  involving  doctrines  which  sound  strangely  to 
those  who  have  always  supposed  that  the  constitutional 
guaranties  extend  to  all  persons,  whatever  their  rela- 
tions, and  protect  from  spoliation  all  property,  by  whom- 
soever held.  These  positions  are  substantially  as  follows: 
That  persons  cease  to  be  within  the  protection  6f  the 
Fourteenth  Amendment,  and  as  such  entitled  to  the 
equal  protection  of  the  laws,  when  they  become  mem- 
bers  of  a corporation;  that  property  when  held  by  per- 
sons associated  together  in  a corporation  is  subject  to 
any  disposition  which  the  State  may,  at  its  will,  see  fit 
to  make;  that,  in  any  view,  the  properfy,  upon  which  the 
taxes  claimed  were  levied,  was  classified  by  its  use,  taken 
out  of  its  general  character  as  real  and  personal  property 
and  thus  lawfully  subjected  to  special  taxation;  and  that 
the  power  of  the  State  cannot  be  questioned  by  the  South- 
ern Pacific  Railroad  Company  by  reason  of  the  covenant 
in  its  mortgage.  These  positions  are  not  advanced  by 
counsel  in  this  language  nor  with  the  baldness  here  given; 
but  they  mean  exactly  what  is  here  stated,  or  they  mean 
nothing,  as  will  clearly  appear  when  we  analyze  the  lan- 
guage in  which  they  are  presented. 

Private  corporations— and  under  this  head,  with  the 
exception  of  sole  corporations,  with  which  we  are  not 
now  dealing,  all  corporations  other  than  those  which  are 
public  are  included — private  corporations  consist  of  an 
association  of  individuals  united  for  some  lawful  purpose, 
and  permitted  to  use  a common  name  in  their  business, 
and  have  succession  of  membership  without  dissolution.' 
As  said  by  Chief  Justice  Marshall,  “ The  great  object  of 
an  incorporation  is  to  bestow  the  character  and  prop- 
erties of  individuality  on  a collective  and  changing  body 


31 


of  men.”  ( Providence  Bank  vs.  Billings,  4 Pet.,  514,  562.) 

In  this  State  they  are  formed  under,  general  laws.  By 
complying  with  certain  prescribed  forms  any  five  persons 
may  thus  associate  themselves.  In  that  sense  corpora- 
tions are  creatures  of  the  State;  they  could  not  exist  in- 
dependently of  the  law,  and  the  law  may,  of  course,  pre- 
scribe any  conditions,  not  prohibited  by  the  Constitution 
of  the  United  States,  upon  which  they  may  be  formed 
and  continued.  But  the  members  do  not,  because  of  such 
association,  lose  their  rights  to  protection,  and  equality  of 
protection.  They  continue,  notwithstanding,  to  possess 
the  same  right  to  life  and  liberty  as  before,  and  also  to 
their  property,  except  as  they  may  have  stipulated  other- 
wise. As  members  of  the  association— of  the  artificial 
body — the  intangible  thing  called  by  a name  given  by 
themselves— their  interests,  it  is  true,  are  undivided,  and 
constitute  only  a right  during  the  continuance  of  the  cor- 
poration to  participate  in  its  dividends,  and,  on  its  disso- 
lution, to  a proportionate  share  of  its  assets;  but  it  is 
property  nevertheless,  and  the  courts  will  protect,  it,  as 
they  will  any  other  property,  from  injury  or  spoliation. 

■Whatever  affects  the  property  of  the  corporation,  that 
is,  of  all  the  members  united  by  the  common  name,  nec- 
essarily affects  their  interests.  If  all  the  members  of  the 
corporation  die  or  withdraw  from  the  association,  the  cor- 
poration is  dead;  it  lives  and  can  live  only  through  its 
members.  When  they  disappear  the  corporation  disap- 
pears. Whatever  confiscates  or  imposes  burdens  on  its 
property,  confiscates  or  imposes  burdens  on  their  prop- 
erty; otherwise  nobody  would  be  injured  by  the  proceed- 
ing. ' Whatever  advances  the  prosperity  or  wealth  of  the 
corporation,  advances  proportionately  the  prosperity  and 
business  of  the  corporators;  otherwise  no  one  would  be 
benefited.  It  is  impossible  to  conceive  of  a corporation 
suffering  an  injury  or  reaping  a benefit  except  through  its 
members.  The  legal  entity,  the  metaphysical  being  that 
is  called  a corporation,  cannot  feel  either.  So,  therefore, 


32 


whenever  a provision  of  the  Constitution  or  of  a law  guar- 
antees to  persons  protection  in  their  property  or  affords  to 
them  the  means  for  its  protection,  or  prohibits  injurious 
legislation  affecting  it,  the  benefits  of  the  provision  or  law 
are  extended  to  corporations,  not  to  the  name  under  which 
different  persons  are  united,  but  to  the  individuals  com- 
posing the  union.  The  courts  will  always  look  through 
the  name  to  see  and  protect  those  whom  the  name  repre- 
sents. Thus,  inasmuch  as  the  Constitution  extended  the 
judicial  power  of  the  United  States  to  controversies  be- 
tween citizens  of  a State  and  aliens,  and  between  citizens 
of  different  States,  because  its  framers  apprehended  that 
State  tribunals  in  such  controversies  might  be  swayed  by 
local  feelings,  prejudices,  or  attachments,  Chief  Justice 
Marshal,  speaking  for  the  whole  Supreme  Court,  held  that 
corporations  were  within  the  provision.  “ Aliens,  or  citi- 
zens of  different  States,”  said  that  great  judge,  “ are  not 
less  susceptible  of  these  apprehensions,  nor  can  they  be 
supposed  to  be  less  the  objects  of  constitutional  provision, 
because  they  are  allowed  to  sue  by  a corporate  name. 
That  name,  indeed,  cannot  be  an  alien  or  a citizen,  but 
the  persons  whom  it  represents  may  be  the  one  or  the 
other;  and  the  controversy  is,  in  fact  and  in  law,  between 
these  persons  suing  in  their  corporate  character,  by  their 
corporate  name,  for  a corporate  right,  and  the  individual 
against  whom  the  suit  may  be  instituted.  Substantially 
and  essentially,  the  parties  in  such  a case,  where  the  mem- 
bers of  the  corporation  are  aliens  or  citizens  of  a differ- 
ent State  from  the  opposite  party,  come  within  the  spirit 
and  terms  of  the  jurisdiction  conferred  by  the  Constitution 
on  the  national  tribunals.  Such  has  been  the  universal 
understanding  on  the  subject.”  ( The  United  States  vs.  De- 
vauXj  5 Cranch,  61,  87.) 

Similar  was  the  construction  given  by  that  court  to  a 
clause  in  the  treaty  of  peace  of  1783  between  the  United 
States  and  Great  Britain.  The  sixth  article  provided  that 
there  should  be  “ no  future  confiscation  made  nor  any 


83 


prosecutions  commenced  against  any  person  or  persons 
for  or  by  reason  of  the  part  which  he  or  they  may 
have  taken  in  the  present  war,  and  that  no  person  shall 
on  that  account  suffer  any  future  loss  or  damage,  either 
in  his  person,  liberty  or  property.”  The  State  of  Ver- 
mont undertook  to  confiscate  the  property  of  an  English 
corporation  and  give  it  away.  The  corporation  claimed 
the  benefit  of  the  article,  and  recovered  the  property 
against  the  objection  that  the  treaty  applied  only  to  natu- 
ral persons,  and  could  not  embrace  corporations,  because 
they  were  not  persons  who  could  have  taken  part  in  the 
war,  or  be  considered  British  subjects.  Much  stronger 
is  that  case  than  the  one  now  before  us;  but  the  Supreme 
Court  looked  with  undimmed  vision  through  the  legal  en- 
tity, the  artificial  creation  of  the  State,  and  saw  the  living  hu- 
man beings  whom  it  represented,  and  protected  them  under 
their  corporate  name.  ( Society  for  the  Propagation  of  the  Gos- 
pel in  Foreign  Parts  vs.  Town  of  New  Haven , 8 Wheat.,  464.) 

The  Fifth  Amendment  to  the  Constitution  declares  that 
no  person  shall  “ be  deprived  of  life,  liberty,  or  property, 
without  due  process  of  law.”  This  is  a limitation  upon 
the  Federal  Government  similar  to  that  which  exists  in  the 
Constitution  of  several  of  the  States  against  their  own 
legislative  bodies;  and  the  term  person  thus  used  has  al- 
ways been  held,  either  by  tacit  assent  or  express  adjudica- 
tion, whenever  the  question  has  arisen,  to  extend,  so  far  as 
property  is  concerned,  to  corporations;  because  to  protect 
them  from  spoliation  is  to  protect  the  corporators  also. 

Now,  the  Fourteenth  Amendment  extends  in  this  re- 
spect the  same  prohibition  to  the  States  that  the  Fifth 
Amendment  did  to  the  Federal  Government — “ Nor  shall 
any  State  deprive  any  person  of  life,  liberty,  or  property 
without  due  process  of  law  ” — and  it  adds  to  the  inhibi- 
tion, “ nor  deny  to  any  person  within  its  jurisdiction  the 
equal  protection  of  the  laws.”  By  every  canon  of  con- 
struction known  to  the  jurisprudence  of  the  country,  the 
same  meaning  must  be  given  to  the  term  person  in  the 


34 


latter  provision  as  in  the  former.  Surely  these  great 
constitutional  provisions,  which  have  been,  not  inaptly, 
termed  a new  Magna  Charta , cannot  be  made  to  read,  as 
counsel  contend;  “ X or  shall  any  State  deprive  any  per- 
son of  life,  liberty,  or  property  without  due  process  of 
law,  unless  he  be  associated  with  others  in  a corporation , nor 
deny  to  any  person  within  its  jurisdiction  the  equal  pro- 
tection of  the  laws,  unless  he  be  a member  of  a corpora- 
tionHow  petty  and  narrow  would  provisions  thus 
limited  appear  in  the  fundamental  law  of  a great  people ! 

The  constitutional  guaranties  of  due  process  of  law  and 
of  equality  before  the  law  would  be  dwarfed  into  compara- 
tive insignificance,  and  almost  emasculated  of  their  pro- 
tective force,  if  restricted  in  their  meaning  and  operation, 
as  contended  by  counsel.  A large  proportion  of  our  peo- 
ple are  members  of  some  corporation — religious,  educa- 
tional, scientific,  trading,  manufacturing,  or  commercial — 
and  the  amount  of  property  held  by  them  embraces  the 
greater  part  of  the  wealth  of  the  country.  According  to 
the  report  of  the  Commissioner  of  Railroads,  made  to  the 
Secretary  of  the  Interior,  for  the  year  ending  June  30, 
1882,  the  railroad  companies  operated  that  year  104,813 
miles  of  railway,  and  transported  350  million  tons  of 
freight,  of  the  estimated  value  of  12,000  million  dollars. 
The  value  of  these  roads  alone  was  2,600  million  dollars, 
and  they  employed  that  year  1,200,000  persons  in  operat- 
ing the  roads,  besides  400,000  in  construction— a total  of 
1,600,000  persons — about  one  thirty-third  part  of  our 
population  estimated  at  53,000,000. * 

The  value  of  the  property  of  manufacturing  companies 
is  over  1,000  million  dollars;  of  national  banks,  over  700 
millions;  of  insurance  companies,  over  600  millions;  of 
mining  companies,  over  300  millions;  and  of  telegraph 
companies  and  shipping  companies,  each  over  100  million 


* These  figures  are  taken  by  the  Commissioner  from  the  estimate  of 
Henry  Y.  Poor,  a compiler  of  railroad  statistics. 


35 

dollars.  Indeed,  the  aggregate  wealth  of  all  the  trading, 
commercial,  manufacturing,  mining,  shipping,  transporta- 
tion and  other  companies  engaged  in  business,  or  formed 
for  religious,'  educational,  or  scientific  purposes,  amounts 
to  billions  upon  billions  of  dollars — and  yet  all  this  vast 
property,  which  keeps  our  industries  flourishing,  and  fur- 
nishes employment,  comforts,  and  luxuries  to  all  classes, 
and  thus  promotes  civilization  and  progress,  is  lifted,  ac- 
cording to  the  argument  of  counsel,  out  of  the  protection 
of  the  constitutional  guaranties,  by  reason  of  the  incorpo- 
ration of  the  companies — that  is,  because  the  persons  com- 
posing them,  amounting  in  the  aggregate  to  nearly  half 
the  entire  population  of  the  country,  have  united  them- 
selves in  that  form  under  the  law  for  the  convenience  of 
business.  If  the  property  for  that  reason  is  exempted  from 
the  protection  of  one  constitutional  guaranty,  it  must  be 
from  all  such  guaranties.  If  because  of  it,  the  property 
can  be  subjected  to  unequal  and  arbitrary  impositions,  it 
may  for  the  same  reason  be  taken  from  its  owners  without 
due  process  of  law,  and  taken  by  the  State  for  public  use 
without  just  compensation.  If  the  position  be  sound,  it 
follows  that  corporations  hold  all  their  property  and  the 
right  to  its  use  and  enjoyment  at  the  will  of  the  State; 
that  it  may  be  invaded,  seized,  and  the  companies  de- 
spoiled at  the  State’s  pleasure.  It  need  hardly  be  said 
that  there  would  be  little  security  in  the  possession  of 
property  held  by  such  a tenure,  and  of  course  little  in- 
centive to  its  acquisition  and  improvement. 

But  in  truth  the  State  possesses  no  such  arbitrary  power 
over  the  property  of  corporations.  When  allowed  to  ac- 
quire and  own  property,  they  must  be  treated  as  owners, 
with  all  the  rights  incident  to  ownership.  They  have 
a constitutional  right  to  be  so  treated.  Whatever  power 
the  State  may  possess  in  granting  or  in  amending  their 
charters,  it  cannot  withdraw  their  property  from  the  guar- 
anties of  the  Federal  Constitution.  As  was  said  in  the 
San  Mateo  Case:  “It  cannot  impose  the  condition  that 


36 


they  shall  not  resort  to  the  Courts  of  law  for  the  redress 
of  injuries  or  the  protection  of  their  property;  that  they 
shall  make  no  complaint  if  their  goods  are  plundered  and 
their  premises  invaded;  that  they  shall  ask  no  indemnity 
if  their  lands  be  seized  for  public  use,  or  be  taken  with- 
out due  process  of  law;  or  that  they  shall  submit  without 
objection  to  unequal  and  oppressive  burdens  arbitrarily 
imposed  upon  them;  that,  in  other  words,  over  them  and 
their  property  the  State  may  exercise  unlimited  and  irre- 
sponsible power.  Whatever  the  State  may  do,  even  with 
the  creations  of  its  own  will,  it  must  do  in  subordination 
to  the  inhibitions  of  the  Federal  Constitution.” 

The  doctrine  of  unlimited  power  of  the  State  over  cor- 
porations, their  franchises  and  property,  simply  because 
they  are  created  by  the  State,  so  frequently  and  positively 
affirmed  by  counsel,  has  no  foundation  whatever  in  the 
law  of  the  country.  By  the  decision  of  the  Supreme  Court 
of  the  United  States  in  the  Dartmouth  College  Case , it  was 
settled,  after  great  consideration,  that  the  charter  of  a cor- 
poration under  which  its  franchise — its  capacity  to  do 
business  and  hold  property — is  conferred,  is  a contract  be- 
tween the  corporators  and  the  State,  and,  therefore,  within 
the  protection  of  the  Federal  Constitution  prohibiting  leg- 
islation impairing  the  obligation  of  contracts.  So  far  from 
the  State  having  unlimited  control  over  the  franchises  and 
property  of  corporations,  because  of  its  paternity  to  them, 
it  has  under  that  decision  only  such  as  it  possesses  over 
the  contracts  and  property  of  individuals.  It  cannot,  from 
that  fact  alone,  alter,  lessen,  or  revoke  their  franchises, 
although  they  be  a free  gift.  It  cannot,  from  that  fact 
alone,  interfere  with  or  impose  any  burdens  upon  their 
property,  except  as  it  can  interfere  with  and  impose  bur- 
dens upon  the  property  of  individuals.  Such  is  the  doc- 
trine not  only  of  the  Dartmouth  College  Case , but  of  an 
unbroken  line  of  decisions  of  the  Supreme  Court  of  the 
United  States,  and  of  the  Supreme  Courts  of  the  sev- 
eral States,  since  that  case.  To  avoid  that  limitation  upon 


their  power,  most  of  the  States.,  in  charters  since  granted, 
have  reserved  a right  to  repeal,  amend,  or  alter  them,  or 
have  inserted  in  their  constitutions  clauses  reserving  a right 
to  their  legislatures  to  repeal,  alter,  or  amend  the  charters, 
or  to  repeal,  alter,  or  amend  general  laws  under  which  cor- 
porations are  permitted  to  be  formed.  This  reservation, 
in  whatever  form  expressed,  applies  only  to  the  contract  of 
incorporation,  without  which  it  would  be  beyond  revo- 
cation or  change  by  the  State.  It  removes  any  im- 
pediment which  would  otherwise  exist  to  legislation 
affecting  that  contract.  It  leaves  the  corporation  in 
the  same  position  it  would  have  occupied  had  the  Supreme 
Court  held  in  the  Dartmouth  College  Case  that  charters  are 
not  contracts,  and  that  laws  repealing  or  modifying  them 
do  not  impair  the  obligation  of  contracts.  It  accom- 
plishes nothing  more;  therefore,  the  legislation  author- 
ized by  it  must  relate  to  the  contract  embodied  in  the 
charter,  amending,  altering,  or  abrogating  its  provisions. 
Legislation  touching  any  other  subject  is  not  affected  by 
it — neither  authorized  nor  forbidden.  Its  whole  scope 
and  purpose  is  to  enable  the  state  to  pass  laws  with  re- 
spect to  the  charter — the  contract  of  incorporation — which 
would  otherwise  be  in  conflict  with  the  prohibition  of  the 
Federal  Constitution.  Legislation  dealing  with  the  cor- 
poration in  any  other  particular  must,  therefore,  depend 
for  its  validity  upon  the  same  conditions  which  determine 
the  validity  of  like  legislation  affecting  natural  persons. 

The  State  may,  of  course,  accompany  its  grant  with 
such  conditions  as  it  may  deem  proper  for  the  manage- 
ment of  the  affairs  of  the  corporation  which  do  not  im- 
pinge upon  any  provision  of  the  Federal  Constitution; 
and  by  the  reservation  clause  it  will  retain  control  over 
the  grant  and  may  withdraw  it  or  modify  it  at  pleasure. 
It  is  on  this  ground  that  the  State  has  asserted  a right  to 
regulate  the  charges — the  fares  and  freights — of  corpora- 
tions. But  it  is  a novel  doctrine  that  it  can  on  that  ground 
also  control  their  property,  appropriate  it,  burden  it,  and 


35 


despoil  them  of  it,  as  it  may  choose,  unrestrained  by  any 
constitutional  inhibitions.  That  doctrine  has  no  standing 
as  yet  in  the  law  of  this  country.  The  property  acquired 
by  corporations  is  held  independently  of  any  reserved 
power  in  their  charters.  By  force  of  the  reservation  the 
State  may  alter,  amend,  or  revoke  what  it  grants;  nothing 
more.  It  does  not  grant  the  tangible  and  visible  prop- 
erty of  the  companies,  their  roads,  their  roadways,  road- 
beds, rails,  or  rolling-stock.  These  are  their  creation  or 
acquisition.  Over  them  it  can  exercise  only  such  power 
as  may  be  exercised  through  its  control  of  the  franchises 
of  the  companies,  and  such  as  may  be  exercised  over 
the  property  of  natural  persons  engaged  in  similar  busi- 
ness. 

As  justly  said  by  the  Supreme  Court  of  Michigan,  speak- 
ing by  Mr.  Justice  Cooley:  “ It  cannot  be  necessary  at 
this  day  to  enter  upon  a discussion  in  denial  of  the  right 
of  the  Government  to  take  from  either  individuals  or  cor- 
porations any  property  which  they  may  rightfully  have 
acquired.  In  the  most  abitrary  times  such  an  act  was 
recognized  as  pure  tyranny,  and  it  has  been  forbidden  in 
England  ever  since  Magna  Charta , and  in  this  country 
always.  It  is  immaterial  in  what  way  the  property  was 
lawfully  acquired,  whether  by  labor  in  the  ordinary  voca- 
tions of  life,  by  gift  or  descent,  or  by  making  profitable 
use  of  a franchise  granted  by  the  State,  it  is  enough  that 
it  has  become  private  property,  and  it  is  then  protected 
by  the  law  of  the  land.”  ( Detroit  vs.  Detroit  and  Howell 
Plank  Road  Company,  43  Mich.,  146-7.) 

But  it  is  urged  that,  even  with  an  admission  of  these 
positions,  property  may  be  divided  into  classes  and  sub- 
jected to  different  rates;  that  such  classification  may  be 
made  from  inherent  differences  in  the  nature  of  different 
parcels  of  property,  and  also  from  the  different  uses  to 
which  the  same  property  may  be  applied;  and  it  is  sought 
to  place  the  tax  levied  in  these  cases  under  one  of  these 
heads.  As  already  mentioned,  the  Constitution  of  the 


89 


State  provides  with  respect  to  property  that  it  shall  be 
taxed  in  proportion  to  its  value;  it  provides  for  no  specific 
tax  upon  any  article.  The  classification  of  property,  either 
from  its  distinctive  character  or  its  peculiar  use,  must  be 
made  within  the  rule  prescribing  taxation  according  to 
value.  Real  and  personal  property  differing  essentially  in 
their  nature  may  undoubtedly  be  subjected  to  different 
rates;  real  property  may  be  taxed  at  one  rate,  personal 
property  at  another.  But  in  both  cases  the  tax  must  bear 
a definite  proportion  to  the  value  of  the  property.  So,  also, 
if  use  be  the  ground  of  classification,  for  which  a different 
rate  of  taxation  is  prescribed,  the  rate  must  still  bear  a 
definite  proportion  to  the  value.  Now,  there  is  no  differ- 
ence in  the  rate  of  taxation  prescribed  by  the  law  of  the 
State  for  the  property  of  railroad  corporations  and  that 
prescribed  for  the  property  of  individuals.  There  is  only 
one  rate  prescribed  for  all  property.  There  is,  therefore,  as 
said  in  the  San  Mateo  suit,  no  case  presented  for  the  appli- 
cation of  the  doctrine  of  classification  either  from  the  pe- 
culiar character  of  railroad  property  or  its  use. 

The  ground  of  complaint  is  not  that  any  different  rate 
of  taxation  is  adopted — for  there  is  none — but  that  a dif- 
ferent rule  is  followed  in  ascertaining  the  value  of  the 
property  of.  railroad  corporations,  as  a basis  for  taxation, 
from  that  followed  in  ascertaining  the  value  of  property 
held  by  natural  persons.  In  estimating  the  value  in  one 
case  certain  elements  are  considered  by  which  the  value 
as  a basis  for  taxation  is  lessened;  in  estimating  the  value 
in  another  case  those  elements  are  omitted  by  which  the 
valuation  is  proportionately  increased.  All  property  of 
railroad  corporations,  whether  used  in  connection  with  the 
operation  of  their  roads  or  entirely  distinct  from  any  such 
use,  is  estimated  without  regard  to  any  mortgages  thereon, 
while  the  property  of  natural  persons  is  Valued  with  a de- 
duction of  such  mortgages. 

Of  the  property  of  the  railroad  company — the  South- 
ern Pacific — several  million  acres  of  farming  lands  are 

O 


40 


included  in  the  same  mortgage  which  covers  the  road- 
way, roadbed,  rails,  and  rolling-stock  of  the  company. 
2sTo  distinction  is  made  in  the  assessment  of  the  value  of 
any  of  this  property  because  of  the  use  of  it.  The  whole 
is  assessed  in  the  same  manner  without  regard  to  the  mort- 
gage thereon;  and  the  taxes  on  the  whole  of  it  thus  as- 
sessed, with  the  exception  of  the  taxes  on  the  roadbed, 
roadway,  rails,  and  rolling-stock,  have  been  paid  by  the 
companies,  or  parties  to  whom  since  the  levy  certain  par- 
cels have  been  sold.  The  discrimination  between  the  rail- 
road companies  and  individual  proprietors,  in  the  esti- 
mate of  the  value  of  their  property,  is  made  because  of 
its  ownership,  and  not  from  any  specific  differences  in  the 
character  of  the  property,  or  in  the  specific  uses  to  which 
it  is  applied. 

The  farming  lands  held  by  the  company  are  not  differ- 
ent in  character  from  adjoining  farming  lands  held  by 
natural  persons,  yet  they  are  assessed  under  the  sys- 
tem established  by  the  Constitution  of  the  State  upon 
different  principles.  The  roadbed,  roadway,  rails,  and 
rolling-stock  of  the  railroad  companies,  are  not  different 
in  their  nature  or  use  from  the  roadbed,  roadway,  rails, 
and  rolling-stock  owned  in  many  cases  by  natural  persons, 
yet  they  are  subject  to  a different  rule  of  assessment. 
It  is  not  classifying  property  to  make  a distinction  of  that 
character  in  estimating  its  value  as  a basis  for  taxation. 
It  is  making  the  amount  of  taxation  depend,  not  upon  the  na- 
ture of  the  property  or  its  use,  but  upon  its  ownership.  And 
if  this  can  be  done,  there  is  no  protection  against  unequal 
and  oppressive  taxation.  As  justly  observed  by  Mr.  Ed- 
munds in  the  San  Mateo  Case:  “ If  you  once  concede  the 
point  that  you  may  classify  different  rates  upon  the  values 
of  things,  or  may  put  up  your  values  on  different  princi- 
ples, as  values  by  deduction  or  otherwise — which  is  the 
same  thing  stated  in  another  way — then  there  is  no  check 
upon  the  exercise  of  arbitrary  power.  The  mob  or  com- 
mune that  can  get  pessession  of  the  State  Legislature  for 


41 


one  term  may  despoil  every  one  of  the  citizens  whom  it 
chooses  to  despoil,  and  the  liberty  and  the  security  of  the 
Constitution  of  the  United  States,  secured  through  pain- 
ful exertion  and  great  consideration,  crystallized  in  unmis- 
takable language — historic  indeed,  and  beneficent  as  it  is 
historic,  securing  national  intrinsic  rights  everywhere 
and  to  everybody — will  turn  out  to  be  an  utter  sham  and 
delusion.” 

If  to  the  position  of  counsel,  that  property  may  be  classi- 
fied simply  because  owned  by  a corporation,  and  thus 
differently  assessed,  we  add  the  further  position  that  the 
owner  of  the  property  assessed  has  no  constitutional  right 
to  have  notice  of  the  assessment,  or  to  be  heard  respecting 
it,  though  it  be  double  or  treble  the  value  of  the  property — 
though  the  property  be  assessed  at  thousands,  when  worth 
only  hundreds — we  have  a system  established  with  a power 
of  oppression  under  which  no  free  man  should  ever  be 
contented  to  live. 

In  the  argument  of  counsel,  the  distinction  between  taxes 
for  licenses  and  franchises,  and  taxation  upon  values,  seems 
to  have  been  overlooked;  and  because  no  notice  is  required 
in  the  former  case,  and  no  opportunity*  given  to  be  heard, 
therefore  it  is  contended  that  the  rule  is  not  sound,  that 
notice  is  necessary,  and  an  opportunity  of  being  heard  in 
the  latter  case  where  an  assessment  is  made  upon  property 
and  values  are  found  upon  evidence;  yet  the  distinc- 
tion is  plain  and  everywhere  recognized.  A license  tax 
paid  by  an  insurance  company  of  another  State,  in  order 
to  exercise  its  corporate  powers  in  this  State,  is  the  con- 
sideration given  for  a privilege  which  the  company  may 
or  may  not  take;  if  taken,  the  fee  must  be  paid.  Of  course, 
no  notice  there  is  necessary.  If  a person  wishes  a license 
to  do  business  at  a particular  place,  or  of  a particular  kind, 
such  as  selling  liquors,  cigars,  clothes,  or  keeping  a restau- 
rant or  hotel  in  a city,  he  is  only  to  pay  what  the  law  re- 
quires and  go  into  the  business.  Notice  in  such  cases 
would  be  of  no  service  to  him,  and  no  hearing  could  change 
4 


42 


the  result.  And  the  state  may  exact  the  payment  of  a 
particular  sum — such  as  it  deems  proper — as  a condition 
of  the  grant  of  corporate  powers,  or  for  their  continuance, 
and  may  reserve  the  right  to  alter  this  condition  as  it  may 
choose;  or  rather,  the  State  might  have  exercised  such 
power  and  made  such  exaction  had  she  not  by  her  constitu- 
tion declared  that  franchises  should  be  assessed  and  taxed 
as  property,  according  to  their  value.  But  for  this  pro- 
vision no  notice  could  be  required  of  the  amount  de- 
manded for  the  privilege  granted,  nor  opportunity  of  being 
heard  respecting  it;  for  notice  or  hearing  could  be  of  no 
service  to  the  company.  Here  we  are  not  considering  of 
the  compensation  to  be  paid  for  franchises  or  privileges  of 
any  kind,  whether  designated  as  taxes  or  license  fees,  but 
of  taxation  upon  values.  Where  these  are  to  be  ascertained, 
and  evidence  is  to  be  taken  for  that  purpose,  and  a de- 
termination is  to  be  made  which  is  judicial  in  its  character, 
there  the  owner  must  in  some  form — in  some  tribunal — 
have  an  opportunity  afforded  him  to  be  heard  respecting 
the  proceeding  under  which  his  property  may  be  taken 
before  such  proceeding  becomes  final  and  the  valuation  is 
irrevocably  fixed.  And  in  such  cases  there  can  be  no 
valid  deprivation  of  his  property  without  it. 

The  notice  to  which  we  refer  need  not  be  a personal 
citation;  it  is  sufficient  if  it  be  given  by  a law  designating 
the  time  and  place  where  parties  may  contest  the  justice 
of  the  valuation.  As  a general  rule  only  a statutory 
notice  is  given.  The  State  may  designate  the  kind  of 
notice  and  the  manner  in  which  it  shall  be  given.  All 
that  we  assert,  or  have  asserted,  is  that  there  must  be 
a notice  of  some  kind  which  will  call  the  attention  of  the 
parties  to  the  subject,  and  inform  them  when  and  where 
they  will  be  permitted  to  expose  any  alleged  wrong  in  the 
valuation  of  which  they  may  complain. 

It  was  with' reference  to  the  class  of  cases,  where  values 
are  to  be  found  upon  evidence,  that  we  said  in  the  San 
Mateo  suit,  that  notice  and  opportunity  to  be  heard  were 


43 


essential  to  the  validity  of  the  assessment,  and  without 
which  the  proceeding  b}7  which  the  tax-payer’s  property 
was  taken  from  him,  would  not  be  due  process  of  law. 
We  have  heard  nothing  in  the  argument  of  the  present 
cases  or  in  the  criticism  of  the  authorities,  which  in  the 
slightest  degree  affects  the  accuracy  of  the  statement.  In 
Stuart  vs.  Palmer , (74  Y.  Y.,  191,)  the  Court  of  Appeals  of 
Yew  York,  in  an  elaborate  opinion,  speaking  by  Mr.  Justice 
Earl,  said:  “It  is  difficult  to  define  with  precision  the  exact 
meaning  and  scope  of  the  phrase  e due  process  of  law.’ 
Any  definition  which  could  be  given  would  probably  fail 
to  comprehend  all  the  cases  to  which  it  would  apply.  It 
is  probably  better,  as  recently  stated  by  Mr.  Justice  Mil- 
ler, of  the  United  States  Supreme  Court,  ‘ to  leave  the 
meaning  to  be  evolved  by  the  gradual  process  of  judicial 
inclusion  and  exclusion,  as  the  cases  presented  for  decision 
shall  require,  with  the  reasoning  on  which  such  decisions 
may  be  founded.’  (Davidson  vs.  New  Orleans,  96  U.  S., 
104.)  It  may,  however,  be  stated  generally,  that  due  pro- 
cess of  law  requires  an  orderly  proceeding,  adapted  to  the 
nature  of  the  case,  in  which  the  citizen  has  an  opportunity 
to  be  heard,  and  to  defend,  enforce,  and  protect  his  rights. 
A hearing  or  an  opportunity  to  be  heard  is  absolutely  es- 
sential. We  cannot  conceive  of  due  process  of  law  without 
this.”  And,  again,  “ It  has  always  been  the  general  rule 
in  this  country,  in  every  system  of  assessment  and  taxa- 
tion, to  give  the  person  to  be  assessed  an  opportunity  to 
be  heard  at  some  stage  of  the  proceedings.  That  due  pro- 
cess of  law  requires  this  has  been  quite  uniformly  recog- 
nized.” 

Numerous  other  authorities  might  be  cited  to  the  same 
purport,  and  the  language  of  Judge  Cooley,  in  his  Treatise 
on  Taxation,  which  exhibits  a thoughtful  consideration  of 
the  subject,  and  a careful  examination  of  the  adjudged 
cases,  expresses  the  established  law.  Speaking  of  tax 
cases  he  says:  “ We  should  say  that  notice  of  proceedings 
in  such  cases,  and  an  opportunity  for  a hearing  of  some 


44 


description,  were  matters  of  constitutional  right.  It  has 
been  customary  to  provide  for  them  as  a part  of  what 
is  ‘ due  process  of  law  ’ for  these  cases,  and  it  is  not  to  be 
assumed  that  constitutional  provisions,  carefully  framed 
for  the  protection  of  property,  were  intended  or  could 
be  construed  to  sanction  legislation  under  which  officers 
might  secretly  assess  one  for  any  amount  in  their  dis- 
cretion, without  giving  him  an  opportunity  to  contest 
the  justice  of  the  assessment.  It  has  often  been  very 
pointedly  and  emphatically  declared  that  it  is  contrary 
to  the  first  principles  of  justice  that  one  should  be  con- 
demned unheard,  and  it  has  also  been  justly  observed 
of  taxing  officers,  that  ‘ it  would  he  a dangerous  precedent 
to  hold  that  any  absolute  power  resides  in  them  to  tax 
as  they  may  choose  without  giving  any  notice  to  the 
owner.  It  is  a power  liable  to  great  abuse,’  and  it  might 
safely  have  been  added,  it  is  a power  that  under  such  cir- 
cumstances would  be  certain  to  be  abused.  ‘The  general 
principles  of  law  applicable  to  such  tribunals  oppose  the 
exercise  of  any  such  power.’  ” ( Cooley  on  Taxation,  266. ) 

The  suggestion  of  counsel  that  there  is  a difference  in 
the  law  as  to  notice  and  opportunity  of  being  heard,  where 
an  assessment  is  made  for  local  purposes  and  where  it  is 
made  under  a statute  providing  revenue  for  the  State,  is 
without  foundation.  Taxation  for  local  improvements,  or 
for  city,  county,  or  town  purposes,  involves  the  exercise  of 
the  same  power  which  is  exerted  in  taxation  for  State 
or  general  purposes.  It  is  the  sovereign  power  of  the 
State  in  both  cases  which  authorizes  the  tax,  whether  that 
power  be  exerted  directly  by  an  act  of  the  Legislature,  or 
by  a municipal  body  as  an  instrumentality  of  the  State. 
“ That  these  assessments,”  says  Cooley,  speaking  of  such 
as  are  special,  “ are  an  exercise  of  the  taxing  power  has 
over  and  over  again  been  affirmed,  until  the  controversy 
may  be  regarded  as  closed.”  And  this  statement  is  sup- 
ported in  a note  to  his  treatise,  by  a reference  to  numerous 
adjudged  cases,  (p.  430.) 


45 


The  object  both  of  taxation  for  general  purposes  and 
of  assessments  for  local  purposes  is  to  raise  money.  In 
both  cases  property  is  valued  and  a certain  proportion  of 
the  valuation  taken  for  the  designated  purpose.  Whether 
that  purpose  be  general  or  local,  it  in  no  respect  changes 
the  essential  character  of  the  proceeding.  The  property 
from  which  the  exaction  is  to  be  made  is  less  extensive  in 
the  one  case  than  in  the  other;  but  in  both  there  must 
be  evidence  of  its  value  and  a judicial  determination  re- 
specting it.  And  the  fact  that  in  cases  of  local  improve- 
ments there  is  sometimes  a consideration  also  of  the  bene- 
fits to  be  received,  takes  nothing  from  the  judicial  charac- 
ter of  the  proceeding. 

The  clause  of  the  Constitution  which  forbids  depriva- 
tion of  property  without  due  process  of  law,  places  liberty 
under  the  same  guaranty,  and  no  one  can  be  deprived  of 
either — property  or  liberty — under  the  name  of  taxation, 
any  more  than  under  any  other  name,  by  officers  of  the 
State,  without  some  notice  of  their  proceedings  and  a 
right  to  be  heard  respecting  their  determination  before  it 
is  executed. 

The  covenant  in  the  mortgage  of  the  Southern  Pacific 
Railroad  Company  cannot  affect  one  way  or  the  other  the 
right  of  the  plaintiff  to  recover  against  that  company. 
The  power  of  the  State  is  not  enlarged  nor  diminished  by 
it.  It  is  not  made  with  the  State  and  could  not  be  en- 
forced by  it.  So  far  as  the  power  or  action  of  the  State 
is  concerned,  it  cannot  possibly  have  any  influence.  It 
is  a matter  which  concerns  only  the  parties.  They  can  by 
arrangement  vary  it  any  day;  they  may  enlarge  it,  qualify 
it,  or  release  it  whenever  they  choose.  It  would  be 
strange,  indeed,  if  the  State’s  power  of  taxation  depended 
in  any  way  upon  the  stipulation  of  third  parties,  or  the 
validity  of  a tax  could  be  affected  by  it.  The  covenant 
reads  as  follows:  “And  the  said  party  of  the  first  part 
hereby  agrees  and  covenants  to  and  with  the  said  parties 
of  the  second  part,  and  their  successors  in  said  trust,  that 


46 


it  will  pay  all  ordinary  and  extraordinary  taxes,  assess- 
ments, and  other  public  burdens  and  charges  which  shall 
or  may  be  imposed  upon  the  property  herein  described  and 
hereby  mortgaged,  and  every  part  thereof.”  Then  follows  a 
provision  that  the  mortgagees  or  any  bondholder  may,  in 
case  of  default  by  the  mortgagor,  pay  and  discharge  the 
taxes  and  any  lien  or  incumbrance  upon  the  property  prior 
to  the  mortgage,  and  that  for  such  payments  the  party 
making  them  shall  be  allowed  interest  and  be  secured  by 
the  mortgage. 

The  covenant  is  necessarily  limited  to  such  taxes  as  may 
he  lawfully  levied  on  the  mortgaged  property,  such  as  the 
mortgagor  is  personally  bound  to  the  State  to  pay,  and  to 
such  other  liens  as  may  arise  from  his  previous  contract 
with  respect  to  the  property.  The  mortgagor  could  not 
be  required  to  pay  any  other  taxes  or  discharge  any  other 
liens,  and  should  the  mortgagees  pay  or  discharge  any 
other,  they  could  neither  hold  the  mortgage  as  security 
for  the  amount,  nor  the  mortgagor  liable.  The  covenant 
cannot  he  construed  to  extend  to  any  taxes  levied  in 
disregard  of  the  Constitution  or  laws,  nor  to  such  liens 
as  may  arise  from  a tax  on  other  than  the  mortgaged 
property,  nor  from  any  act  of  the  mortgagees,  nor  any 
judgment  against  them.  Should  a judgment,  for  instance, 
against  them  become  a lien  upon  all  their  interests  in  real 
property,  and,  among  others,  on  that  conferred  by  the 
mortgage,  it  would  not  be  embraced  by  the  covenant. 
That  does  not  cover  taxes  levied  or  leviable  on  the  mort- 
gage, nor  on  the  bonds  secured;  they  are  not  within  its 
terms,  and  the  State  cannot  enlarge  its  meaning. 

At  the  time  the  mortgage  was  given,  there  had  been 
conflicting  decisions  of  the  Supreme  Court  of  the  State 
as  to  the  liability  of  mortgages  to  taxation.  It  must  be 
supposed  that  the  parties  were  well  acquainted  with  these 
rulings,  and,  though  the  last  decision  then  rendered  was 
against  their  taxation,  it  was  the  subject  of  popular  com- 
ment and  discontent;  and  counsel  inform  us,  was  one  of 


47 


the  most  potent  causes  which  led  to  the  calling  of  a 
convention  to  change  the  Constitution.  If  the  parties, 
therefore,  had  intended  to  enter  into  a covenant  that  should 
bind  the  mortgagor  to  pay  any  taxes  which  might  thereaf- 
ter be  levied  on  the  mortgage,  it  would  have  been  the 
natural  and  easy  way  to  say  so.  Not  having  said  so,  we 
cannot  impute  to  the  language  used  anything  beyond  its 
plain  meaning — and  that  is,  that  the  mortgagor  would 
pay  such  taxes  and  discharge  such  liens  on  the  property 
as  should  be  legally  chargeable  to  him;  not  such  as 
the  law  might  afterwards  impose  upon  the  mort- 
gagees. In  fact,  the  covenant  creates  no  greater  liability 
on  the  part  of  the  mortgagor  than  would  have  existed 
without  it;  and  it  was  inserted  only  out  of  abundant 
caution.  Every  mortgagor  is  bound  to  pay  the  taxes 
lawfully  levied  on  the  property  mortgaged,  and  to  dis- 
charge any  liens  created  by  his  previous  act;  and  if  at 
any  time  the  mortgagee  is  compelled  to  pay  the  taxes 
and  discharge  such  liens  to  preserve  the  security,  he  can 
collect  the  amount  from  the  mortgagor.  So  the  question 
comes  back  to  the  original  point  in  the  case — were  the 
taxes  for  which  the  present  action  was  brought  lawfully 
levied  ? If  so,  they  can  be  enforced,  whatever  may  be 
the  private  relations  or  stipulations  between  the  par- 
ties to  the  security.  If  not  lawfully  levied,  if  the  law 
or  State  Constitution,  under  which  they  were  imposed,  is 
in  conflict  with  the  inhibitions  of  the  Federal  Constitu- 
tion, if  the  taxes  were  laid  upon  interests  "with  which 
the  mortgagor  had  parted,  they  cannot  be  enforced,  what- 
ever may  be  the  pledges  of  the  parties  to  each  other.  The 
argument  of  the  plaintiff  amounts  to  this — if  the  taxes 
had  been  lawfully  levied  on  the  mortgage,  the  mortgagor 
would  have  been  obliged  to  pay  them  under  its  covenant; 
therefore  it  is  not  injured  by  the  illegality  of  the  levy,  and 
not  being  injured  by  it,  should  not  be  heard  to  complain  of 
it,  but  be  compelled  to  pay  the  taxes.  The  answer  to  this 
specious  reasoning  is  obvious.  If  the  taxes  are  not  lawfully 


48 


levied,  there  are  none  for  the  payment  of  which  the  cove- 
nant can  be  invoked  even  by  the  mortgagees.  The  plain- 
tiff must  show  that  there  rests  upon  the  mortgagor  a legal 
obligation  to  the  State  to  pay  the  taxes,  arising  upon  its 
constitution  or  laws,  not  from  any  stipulation  the  parties 
may  have  made  with  each  other,  with  which  the  State  has 
no  concern.  The  action  is  not  to  enforce  a lien  upon  the 
property;  it  is  for  a personal  demand,  and  a personal  lia- 
bility to  the  State  must  be  shown.  No  other  liability  of 
any  kind  to  any  party  can  aid  a recovery. 

The  covenant  we  have  been  considering  is  not  contained 
in  the  mortgage  on  the  lands  of  the  Central  Pacific  Com- 
pany; and  for  such  lands  in  California,  amounting  to  up- 
wards of  six  hundred  and  fiftjr  thousand  acres,  that  com- 
pany is  assessed  and  taxed  without  any  deduction  of  the 
mortgage  from  their  value,  just  as  the  Southern  Pacific 
Company  is  taxed  for  its  lands.  The  amount  due  on  the 
land  mortgage  is  over  five  and  a half  million  dollars. 

I have  thus  gone  over,  so  far  as  I deem  it  necessary  or 
important,  the  several  positions  of  counsel  for  the  plaintiffs, 
and  in  none  of  them  do  I find  any  sufficient  answer  to  the 
objection  of  the  defendants.  This  opinion  might,  there- 
fore, close  with  a simple  order  directing  judgment  for  the 
defendants.  But  owing  to  misapprehensions  that  have 
largely  prevailed  in  the  community  since  the  trial  of  the 
San  Mateo  Case , which  involved  similar  questions,  as  to 
the  effect  of  a decision  against  the  State  upon  its  right  to 
subject  railroad  property  to  its  just  proportion  of  the  pub- 
lic burdens,  I will  venture  to  make  some  suggestions  as  to 
the  manner  in  which  all  such  demands  of  the  State  may 
be  enforced  without  infringing  any  principle  of  Constitu- 
tional law.  I am  profoundly  sensible  of  the  irritation  which 
a supposed  desire  to  escape  from  the  just  burdens  of  gov- 
ernment naturally  creates.  The  more  powerful,  the  more 
wealthy  the  party,  the  more  intense  the  feeling;  and  it 
finds  expression  in  words  of  bitter  complaint,  not  merely 
against  the  party,  but  sometimes  also  against  any  adminis- 


49 


tration  of  justice  which  tolerates  such  supposed  evasion. 
It  is  sometimes  forgotten  that  the  Courts  cannot  supply 
the  defects  of  the  law,  nor  always  correct  the  mistakes  of 
public  officers,  nor  the  errors  even  of  learned  counsel. 
Certainly  no  member  of  this  Court  would  countenance 
the  escape  of  anybody  from  his  just  obligations;  hut  it 
cannot,  with  any  seeming  justice,  declare  that  one  party 
shall  discharge  an  obligation  which  the  law,  properly  ad- 
ministered, would  impose  upon  another.  Its  duty  is  to 
administer  the  law  as  it  finds  it,  not  to  make  it,  never  for- 
getting that  its  administration  must  always  be  in  subordi- 
nation to  those  great  principles  for  the  protection  of  pri- 
vate rights,  which  are  embodied  in  our  National  Constitu- 
tion, and  which  are  of  priceless  value  to  every  one  in  the 
State. 

The  railroad  companies  in  California  are  taxed  yearly 
to  an  amount  exceeding  $600,000.  Their  property  is 
heavily  encumbered  with  mortgages,  amounting  to  much 
more  than  its  actual  value.  Why  should  they  not  be  al- 
lowed by  law,  if  they  pay  this  sum,  a credit  for  it  on  their 
mortgages,  as  any  natural  person  paying  it  would  be  al- 
lowed ? Why  should  this  unjust  discrimination  be  made 
against  them  ? Why  should  they  by  law  be  denied  a 
credit  for  this  more  than  $600,000  a year  ? Is  there  any 
justice  in  this  denial?  There  is  no  difficulty  in  assessing 
and  taxing  the  mortgages,  if  the  words  “ except  as  to  rail- 
road and  other  quasi  public  corporations  ” be  eliminated 
from  the  Constitution  as  invalid.  The  imaginary  diffi- 
culty has  arisen  from  the  supposed  necessity  of  taxing  the 
debts,  which  the  bonds  secured.  As  these  are  held  in  dif- 
ferent parts  of  the  country,  some  out  of  the  State,  it  would 
be  impossible,  it  is  said,  to  reach  them.  But  the  answer 
is  that  the  taxes  should  be  placed  upon  the  mortgages, 
which  for  purposes  of  assessment  and  taxation,  are  to  be 
treated  as  interests  in  the  property  mortgaged,  as  much  so 
as  if  it  had  been  unconditionally  conveyed  to  the  mortga- 
gees. The  records  of  the  different  counties  show  the  mortga- 
5 


50 


\ 


ges.  The  assessors  can  return  to  the  Board  of  Equalization 
the  value  of  the  property  covered  by  the  mortgages  in  their 
respective  counties,  under  section  3678  of  the  Political  Code. 
The  Board  would  then  have  the  value  of  the  property  of  the 
companies  and  the  amount  of  the  mortgages  before  them. 
The  mortgage  of  the  Southern  Pacific  Company  being 
greater  than  the  value  of  the  entire  mortgaged  property, 
it  would  be  assessed  at  such  value.  It  could  never,  as  a 
mortgage,  be  worth  more  than  the  property.  If  necessary 
or  convenient,  the  assessment  of  the  mortgage  on  the 
roadway,  roadbed,  rails,  and  rolling-stack  could  be  stated 
separately  from  the  value  of  the  mortgage  on  other  prop- 
erty of  the  company,  and  apportioned  to  the  different 
counties  as  at  present.  The  value  of  the  mortgage  on 
other  property  could  also  be  apportioned  as  required  by 
the  Political  Code.  Why  then  should  not  this  system  be 
pursued  ? The  State  would  thus  collect  all  the  taxes  which 
it  ought  to  collect.  The  tax  being  a lien  upon  the  prop- 
erty, could  be  enforced  by  a sale  of  the  property,  just  as 
though  it  was  levied  on  the  property,  and  not  upon  the 
mortgages.  If  the  companies  should  then  pay  the  tax, 
they  could  by  the  law  claim  credit  for  it  on  their  mort- 
gages; and  it  would  be  deducted  in  the  payment  of  the 
interest  or  principal  of  their  bonds.  Then  justice  would 
be  done  to  the  corporations  as  it  is  done  to  individuals. 
The  same  proceeding  could  be  pursued  with  the  first  mort- 
gage on  the  property  of  the  Central  Pacific  Company. 
That  also  being  greater  than  the  value  of  the  property,  the 
State  would  be  able  to  collect  as  large  a revenue  as  by 
taxation  on  the  property  itself,  and  the  Company  would 
have  the  benefit  of  the  payment  by  a credit  on  its  mort- 
gage. 

It  follows  from  the  views  expressed,  that  findings  must 
be  had  for  the  defendants,  and  judgment  in  their  favor 
entered  thereon. 


51 


CONCURRING  OPINION. 


Sawyer,  Circuit  Judge : 

The  discussion  in  this  opinion,  though  applicable  to  all 
the  cases  tried,  will  have  special  reference  to  the  facts  in 
the  case  of  Santa  Clara  County  vs.  The  Southern  Pacific 
Railroad  Company.  This  case  is  similar  in  its  main  feat- 
ures to  that  of  San  Mateo  vs.  Southern  Pacific  Railroad 
Company,  decided  by  this  court  last  year.  ( 8 Sawyer,  281. ) 

The  questions  involved  require  for  their  solution  a con- 
struction of  two  clauses  in  the  first  section  of  the  Four- 
teenth Amendment  to  the  Constitution  of  the  United 
States,  which  declare  that  no  State  shall  “ deprive  any 
person  of  life,  liberty,  or  property  without  due  process  of 
law,  nor  deny  to  any  person  within  its  jurisdiction  the 
equal  protection  of  the  laws.”  Does  the  requirement  of 
due  process  of  law  extend  to  the  taking  of  property  by 
taxation,  and  does  equality  of  protection  by  the  laws  se- 
cure a person,  whatever  his  association  with  others  in  busi- 
ness, from  the  imposition  of  greater  burdens  by  taxation 
than  such  as  are  equally  imposed  upon  others  under  like 
circumstances  ? Or,  are  persons  excepted  from  the  pro- 
tection of  these  provisions  when  their  property  is  taken 
for  the  support  of  government,  or  when  they  are  asso- 
ciated with  others  in  a corporation  for  the  more  conveni- 
ent transaction  of  their  business. 

First.  As  to  the  meaning  of  the  phrase,  “ due  process 
of  law,”  in  the  amendment,  I used  this  language  in 
the  San  Mateo  Case:  “No  one,  I apprehend,  would  for 


52 


a moment  contend  that  a man’s  life,  or  his  liberty,  could 
be  legally  taken  away  without  notice  of  the  proceeding, 
or  without  being  offered  an  opportunity  to  be  heard;  or 
that  a proceeding  whereby  his  life  or  liberty  should  be 
forfeited,  or  permanently  affected,  without  notice  or  op- 
portunity to  be  heard  in  his  own  defence,  could,  by  any 
possibility,  be  by  c due  process  of  law.’  In  such  cases 
there  could  be  no  just  conception  of  ‘ due  process  of  law,’ 
that  would  not  embrace  these  elements  of  notice  and  op- 
portunity to  be  heard.  Any  conception  excluding  these 
elements  would  be  abhorrent  to  all  our  ideas  of  either  law 
or  justice.  If  these  elements  must  enter  into  and  consti- 
tute an  essential  part  of  due  process  of  law  in  respect  to 
life  and  liberty,  they  must  also  constitute  essential  ingre- 
dients in  due  process  of  law  where  property  is  to  be  taken; 
for  the  guaranty  in  the  Constitution  is  found  in  the  same 
provision,  in  the  same  connection,  and  in  the  identical 
language  applicable  to  all.  One  meaning,  therefore,  can- 
not be  attributed  to  the  phrase  with  respect  to  property, 
and  another  with  respect  to  life  and  liberty.”  (Ib.,  288.) 

And  it  was  argued  that  the  same  construction  must  be 
given  to  the  same  language  when  used  in  the  same  rela- 
tion with  reference  to  property,  which  is  given  to  it  when 
used  with  reference  to  life  and  liberty,  and,  therefore,  that 
due  process  of  law,  whereby  a party  is  to  be  deprived  of  his 
property,  as  one  element  or  ingredient,  must  include  an 
opportunity  to  be  heard.  This  principle  was  conceived 
to  be  established  by  an  unbroken  line  of  authorities. 
On  the  trial  of  this  case  counsel  have  vehemently  assailed 
this  doctrine,  accompanied  with  a confident  assertion  that 
it  has  not  the  sanction  of  any  authority,  and  that  the  only 
authority  upon  the  point  is  against  it,  and  was  not  referred 
to  by  the  Court  or  by  counsel  in  the  San  Mateo  Case.  It 
may  be  well,  therefore,  to  give  some  further  consideration 
to  the  position  asserted. 

Ho  counsel  has  yet  appeared  who  has  endeavored  to 
maintain  the  proposition  that,  if  a man’s  life  is  taken,  or 


53 


he  is  permanently  deprived  of  his  liberty,  by  some  secret 
tribunal  or  body  of  men,  without  having  notice  or  an  op- 
portunity to  be  heard  in  his  own  defence,  he  has  had  the 
benefit  of  “ due  process  of  law.”  If  there  is  anything  that 
was  settled  under  the  principles  of  the  common  and  the 
constitutional  law  of  England,  before  the  severance  of  the 
Colonies  from  the  mother  country  and  the  establishment 
of  our  National  Constitution,  it  is,  that  no  man  can  be  de- 
prived of  his  life  or  his  liberty  without  being  afforded 
an  opportunity  to  be  heard  in  his  own  defence.  The  law 
of  the  land — due  process  of  law — vouchsafes  to  him  this 
right  or  privilege.  A man  deprived  of  life  without  having 
an  opportunity  to  be  heard,  is  simply  assassinated,  or  mur- 
dered; and  the  man  permanently  immured  in  a dungeon 
for  an  imputed  offence,  upon  the  order  of  any  man  or 
body  of  men,  without  an  opportunity  to  be  heard  against 
the  charge  made,  is  arbitrarily  and  despotically  deprived 
of  his  liberty  without  authority  of  law — without  “ due 
process  of  law,”  and  in  direct  violation  of  “ the  law  of  the 
land.”  So,  also,  I have  understood  it  to  be  equally  well 
established,  as  apart  of  the  common  and  constitutional  law 
of  England,  as  a general  rule,  that  no  man’s  property  can 
be  lawfully  taken  from  him  against  his  will  without  an 
opportunity  of  being  heard. 

The  rights  of  life,  liberty,  and  property  are  all  funda- 
mental, personal  rights  of  the  same  grade  or  character. 
They  are  treated  as  such  in  the  amendment  to  the  Con- 
stitution in  question ; and  placed  upon  precisely  the  same 
legal  footing,  in  the  same  sentence  ; the  identical  words, 
without  even  a repetition,  covering  them  all — nor  “ shall 
deprive  any  person  of  life,  liberty,  or  property  without 
due  process  of  law.”  No  one  has  attempted  to  maintain 
the  proposition,  that  a person  can  be  lawfully  deprived  of 
his  life  or  liberty  without  an  opportunity  to  be  heard,  nor 
has  any  one,  so  far  as  I am  aware,  endeavored  to  show 
that  “ due  process  of  law,”  as  a general  rule,  respecting 
notice,  and  an  opportunity  to  be  heard,  means  one  thing 


54 


with  reference  to  depriving  one  of  life  and  liberty,  and 
something  else,  with  reference  to  depriving  him  of  prop- 
erty. Counsel  only  seek  to  maintain  that  “ due  process  of 
law  ” does  not,  universally , require  an  opportunity  to  be 
heard,  as  a condition  of  lawfully  depriving  one  of  his 
property,  without  considering  the  other  branch  of  the 
proposition.  It  devolves  upon  those  who  maintain  that 
there  is  a difference  in  the  signification  of  this  clause,  as  a 
general  rule,  when  applied  to  life  and  liberty  and  when 
applied  to  property,  to  clearly  establish  it;  and  if  there  is 
an  exception  to  the  universality  of  the  rule,  to  point  it  out, 
and  show  that  the  case  under  consideration  is  within  the 
exception. 

In  combating  the  principle  stated  it  is  insisted  that  the 
language  used  by  the  court  is  too  broad;  that  there  are 
cases — peculiar  cases — as  shown  by  the  authority  cited,  to 
which  it  is  inapplicable.  If  this  were  so,  it  would  only 
appear  that  there  may  be  exceptions  to  the  general  rule, 
depending  upon  special  circumstances  and  long  established 
usage.  It  would  then  be  necessary  to  show  that  the  case 
in  hand  is  within  some  recognized  exception,  and  this  has 
not  been  done. 

In  the  San  Mateo  Case  we  disclaimed  any  attempt  to 
give  an  accurate  definition  of  the  term  “ due  process  of 
law,”  which  should  be  “ applicable  to  all  cases,”  as  it  was  not 
deemed  “ necessary  for  the  determination  of  that  case.” 
This  disclaimer  left  room  for  exceptions  founded  upon 
long  recognized  and  well-established  usage.  We  there 
said  that  “ to  take  one’s  property  by  taxation  is  to  de- 
prive one  of  his  property;  and  if  not  taken  in  pursuance 
of  the  law  of  the  land , in  some  due  and  recognized 
course  of  proceedings  based  upon  well  recognized  principles 
in  force  before  and  at  the  time  this  clause  was  first  introduced 
into  the  various  constitutions  and  the  legislation  of  the  country — 
is  to  take  it  without  due  process  of  law.”  The  doctrine 
was  recognized  that  those  forms  and  courses  of  proceed- 
ing based  upon  well-recognized  principles  in  force  before 


55 


and  at  the  time  of  the  adoption  of  our  National  Constitu- 
tion, would  be  “ due  process  of  law.”  The  case  of  Murray's 
Lessee  et  al.  vs.  Hoboken  Lund  and  Improvement  Company, 
(18  How.,  274,)  is  a case  of  the  kind — an  exception  to  the 
ordinary  rule  of  law  depending  upon  the  peculiar  character, 
conditions,  and  circumstances  of  the  case. 

The  mode  of  proceeding  in  this  particular  class  of  cases 
had  the  sanction  of  long-established  usage  in  England 
before  and  down  to  the  settlement  of  our  country;  and 
Mr.  Justice  Curtis’  whole  opinion  is  a labored  effort  to 
show,  that  the  case  he  was  discussing,  was  an  exception 
to  the  ordinary  rule  of  law,  dependent  alone  upon  long- 
established  and  exceptional  usage.  The  case  was  that  of 
a defaulting  public  officer,  who  had  collected  a large 
amount  of  public  revenue  of  the  United  States,  and  appro- 
priated it  to  his  own  use.  The  act  of  Congress  provided 
a summary  mode  of  proceeding  to  collect  the  money 
from  him.  It  provided,  among  other  things,  for  an 
auditing  of  the  defaulting  official’s  accounts,  and  certi- 
fying the  amount  due  by  the  proper  officers  of  the 
Treasury  (the  accounts  are  made  up  from  the  returns  of 
the  officer  himself,  and  are  matters  of  record  in  the  Treas- 
ury Department) ; that  when  so  audited  and  certified,  it 
should  become  a lien  on  the  property  of  the  defaulting 
officer,  which  should  be  enforced  by  seizure  and  sale,  un- 
der a distress  warrant,  issued  by  the  solicitors  of  the  Treas- 
ury. The  Constitution  having  invested  the  judicial 
power  in  the  courts,  and  declared  that  the  judicial  powder 
shall  extend  to  controversies  to  which  the  United  States 
are  a party,  the  questions  were,  whether  these  acts, 
under  the  statute  of  1820,  were  an  exercise  of  judicial 
power,  vested  solely  in  the  courts;  and  if  not  an  exercise 
of  judicial  power,  whether  such  a seizure,  under  the  war- 
rant, without  the  action  of  the  judicial  power,  did  not  de- 
prive the  party  of  his  property  “ without  due  process  of 
law,”  in  violation  of  the  provisions  of  the  Constitution  on 
that  point.  Or,  as  stated  by  Mr.  Justice  Curtis  himself, 


56 


the  questions  were,  whether  “ a collector  of  customs,  from 
whom  a balance  of  account  has  been  found  to  be  due  by 
accounting  officers  of  the  Treasury,  designated  for  that 
purpose  by  law,  can  be  deprived  of  his  liberty,  or  property, 
in  order  to  enforce  payment  of  that  balance,  without  the 
exercise  of  the  judicial  power  of  the  United  States,  and 
yet  by  6 due  process  of  law,’  within  the  meaning  of  those 
terms  in  the  Constitution;  and  if  so,  then,  secondly, 
whether  the  warrant  in  question  was  such  due  process  of 
law  ?”  He  discusses  the  question  as  to  what  is  meant  by 
“ due  process  of  law,”  and  concludes,  that  a distress  war- 
rant, so  far  as  the  warrant  itself  is  concerned,  is  due  pro- 
cess of  law,  provided  there  is  no  judicial  action  neces- 
sary as  a basis  for  it;  for  Congress  can  prescribe  any 
kind  of  process,  so  far  as  the  form  and  mode  of  issue 
is  concerned.  He  then  discusses  the  question,  as  to 
whether  the  action  of  the  Treasury  Department,  in  audit- 
ing and  certifying  the  account,  constituted  a sufficient 
basis  for  the  warrant  to  make  the  proceeding  due  process 
of  law.  There  being  nothing  in  the  Constitution  to  ex- 
pressly authorize  the  proceeding,  he  “ looked  to  the  usages 
and  modes  of  proceedings  existing  in  the  common  and 
statute  laws  of  England,  before  the  emigration  of  our  an- 
cestors from  England,  and  which  are  not  shown  to  have 
been  unsuited  to  their  civil  and  political  condition  by  hav- 
ing been  acted  on  by  them  after  the  settlement  of  this 
country.”  He  found  in  regard  to  debtors  of  the  King — 
defaulting  receivers  of  the  revenue  in  particular — that  a 
summary  remedy  existed,  and  a writ  of  extent  might  be 
levied  upon  their  goods  and  lands;  but  “ to  authorize  a 
writ  of  extent,  however,  the  debt  must  be  matter  of  record 
in  the  King’s  Exchequer.”  Thus  the  debt,  was  already 
ascertained  by  matter  of  record. 

“ In  regard  to  debts  due  upon  simple  contracts  other 
than  those  due  from  collectors  of  the  revenue,  and  other 
accountants  of  the  Crown,  the  practice  from  very  ancient 
times  has  been  to  issue  a commission  to  inquire  as  to  the 


57 


nature  of  the  debt” — a proceeding  of  a strictly  judicial 
nature  and,  therefore,  due  process  of  law.  These  proceed- 
ings were  had  under  various  acts  of  Parliament — that 
omnipotent  legislative  body  which  could  repeal  Magna 
Charta  itself. 

Justice  Curtis  proceeds:  “This  brief  sketch  of  the 
modes  of  proceeding  to  ascertain  and  enforce  payment  of 
balances  due  from  receivers  of  the  revenue  in  England,  is 
sufficient  to  show  that  the  methods  of  ascertaining  the 
existence  and  amount  of  such  debts,  and  compelling  their 
payment,  have  varied  widely  from  the  usual  course  of  the 
common  law  on  other  subjects ; and  that  as  respects  such 
debts,  due  from  such  officers,  the  law  of  the  land,  author- 
ized the  employment  of  auditors,  and  an  inquisition  with- 
out notice,  and  a species  of  execution,  bearing  a very  close 
resemblance  to  what  is  termed  a warrant  of  distress  in  the 
act  of  1820,  now  in  question.”  “ It  is  certain,  that  this 
diversity  in  the  law  of  the  land,  between  'public  defaulters 
and  ordinary  debtors , was  understood  in  this  country  and 
entered  into  the  legislation  of  the  colonies  and  provinces, 
and  more  especially  of  the  States,  after  the  Declaration  of 
Independence,  and  before  the  formation  of  the  Constitu- 
tion of  the  United  States.” 

As  thus  seen,  this  mode  of  enforcing  the  payment  of 
balances  was  limited  to  defaulting  collectors,  and  “ receiv- 
ers of  the  public  revenues  of  England,  and  where  the 
debts  were  of  record  in  the  King’s  Exchequer.”  And  it 
shows  that  the  methods  of  ascertaining  the  existence  and 
amount  of  such  debts  and  compelling  their  payment  have 
varied  widely  from  the  usual  course  of  the  common  law  on  other 
subjects  ; “ and  as  respects  such  debts  due  from  such  officers, 
‘the  law  of  the  land’  authorized”  a summary  process 
similar  to  that  of  the  law  of  1820;  and  “this  diversity  in 
the  i law  of  the  land  ’ between  public  defaulters  and  ordi- 
nary debtors  was  understood  in  this  country.”  Thus,  this 
mode  of  proceeding  was  an  exception  to  the  general  rule 
as  to  what  is  “ the  law  of  the  land,”  or  “ due  process  of 


58 


law,”  made  in  favor  of  the  King  against  those  who  ac- 
cepted office  from  him,  under  and  subject  to  laws  burdened, 
at  the  time,  with  peculiar  and  stringent  remedies,  and  then 
violated  their  duties  and  trusts  by  appropriating  the  public 
revenues  collected,  instead  of  putting  them  into  the 
Treasury;  and  whose  indebtedness  was  “ matter  of  record 
in  the  King’s  Exchequer.”  This  exception  is  recognized 
by  the  Court,  but  as  an  exception , and  the  decision  is  put 
upon  the  ground  that  it  is  an  exception , and  not  the  rule. 
“ For,”  says  Mr.  Justice  Curtis,  “ though  ‘ due  process  of 
law  ’ generally  implies  actor , reus,  judex,  regular  allegations, 
opportunity  to  answer,  and  a trial  according  to  some  settled 
course  of  judicial  proceedings  (2  Inst.,  47,  50;  Hoke  vs.  Hen- 
derson, 4 Dev.,  H.  C.,  15;  Taylor  vs.  Porter,  4 Hill,  146; 
Van  Zant  vs.  Waddell,  2 Yerg.,260;  State  Bank  vs.  Cooper, 
id.,  599;  Jones'  Heirs  vs.  Perry,  10  id.,  59;  Green  vs.  Briggs, 
1 Curtis,  311),  yet  this  is  not  universally  true.”  An  excep- 
tion, then,  is  found  in  cases  against  defaulting  public  officers 
ic hose  debts  are  of  record.  And  such  was  the  case  of  Mur- 
ray's Lessee  vs.  Hoboken  Land  and  Improvement  Company. 

The  Court,  in  speaking  of  duties  levied,  and  of  defaulting 
officers,  further  says:  “ What  officers  should  be  appointed  to 
collect  the  revenue  thus  authorized  to  be  raised,  and  to  dis- 
burse it  in  payment  of  the  debts  of  the  United  States;  what 
duties  should  be  required  of  them;  when  and  how,  and  to 
whom  they  should  account,  and  what  security  they  should 
furnish,  and  to  what  remedies  they  should  be  subjected  to  enforce 
the  proper  discharge  of  their  duties,  Congress  was  to  deter- 
mine. In  the  exercise  of  their  powers,  they  have  required 
collectors  of  customs  to  be  appointed;  made  it  incumbent 
on  them  to  account,  from  time  to  time,  with  certain  officers 
of  the  Treasury  Department,  and  to  furnish  sureties  by 
bond  for  the  payment  of  all  balances  of  the  public  money 
which  may  become  due  from  them.  And  by  the  act  of 
1820,  now  in  question,  they  have  undertaken  to  provide 
summary  means  to  compel  these  officers — and  in  case  of  their 
default,  their  sureties — to  pay  such  balances  of  the  public  money 
as  may  be  in  their  hands.” 


59 


Whatever  may  have  been  the  grounds  of  the  distinc- 
tion originally  made  between  defaulters  of  the  public 
revenue  and  other  citizens,  the  case  of  such  default- 
ing officers  is  clearly  shown  to  be  an  exception  to  the  gen- 
eral rule,  resting  upon  very  special  circumstances,  and  the 
case  cited  and  relied  on  is  a striking  illustration  of  the  maxim 
that  u the  exception  proves  the  rule” 

But,  again,  under  the  statute  of  1820,  (8  Stat.  IT.  S., 
595,)  by  the  provisions  of  section  4,  the  party  did  in 
fact  have  an  opportunity  to  be  heard  before  he  could  be 
deprived  of  his  property.  That  section  provided  “ that 
if  any  person  should  consider  himself  aggrieved  by  any 
warrant  issued  under  this  act,  he  may  prefer  a hill  of  com- 
plaint to  any  District  Judge  of  the  United  States,  setting 
forth  the  nature  and  extent  of  the  injury  of  which  he  com- 
plains,” and  have  a hearing.  It  is  true  that  there  was  a 
determination  of  his  liability,  and  process  issued,  which 
would  become  final  and  conclusive  if  he  did  not  ask  for  a 
hearing,  and  Mr.  Justice  Curtis  observes  upon  this  sec- 
tion: “ The  act  of  1820  makes  such  a provision  for  re- 
viewing the  decision  of  the  accounting  officers  of  the 
Treasury.  But  until  it  is  reviewed  it  is  final  and  binding.” 
So  in  all  cases  of  taxes  under  the  Constitution  of  Cali- 
fornia, except  where  the  assessment  is  by  the  State 
Board  of  Equalization,  the  assessment  is  first  made  by  the 
assessor,  and  the  tax-payer  may  afterwards,  on  a proper 
petition,  have  the  action  of  the  assessor  reviewed  by  the 
Board  of  Equalization,  and  thus  have  an  opportunity  to 
be  heard  before  his  property  is  finally  appropriated ; yet, 
if  he  does  not  apply  for  such  review,  the  tax  levy  becomes 
final  and  conclusive,  and  will  be  collected  in  the  ordinary 
way  by  seizure  and  sale,  or  such  other  means  as  may  be 
provided. 

Both  the  ordinary  tax-payer  under  the  laws  of  Califor- 
nia and  the  defaulting  officers  under  the  act  of  1820,  there^ 
fore,  have  an  opportunity  to  be  heard  before  their  prop- 
erty can  be  finally  appropriated,  in  a similar  sense,  and  at 


60 


a corresponding  stage  of  the  proceeding.  If  the  oppor- 
tunity thus  afforded  the  tax-payer  is  in  accordance  with 
due  process  of  law  within  the  general  rule,  it  is  not  appar- 
ent why  the  opportunity  afforded  the  defaulting  officer  by 
the  act  of  1820  is  not  also.  They  both  stand  upon  the  same 
footing  as  to  the  time  when  an  opportunity  to  be  heard  is 
given — the  first  determination  before  a hearing  being  only 
provisional;  the  accounting  and  seizure  under  the  act  of 
1820  being  something  in  the  nature  of  an  attachment  to 
secure  a lien,  with  an  opportunity  to  be  afterwards  heard 
if  the  amount  claimed  by  the  Government  is  not,  in  fact, 
due. 

In  our  judgment,  this  case  in  no  sense  or  particular 
conflicts  with  the  point  decided  by  us  as  to  the  general 
rule — and  the  rule  applicable  to  that  case — in  the  San 
Mateo  County  Case ; on  the  contrary,  we  think  it  a strong 
case  to  support  the  rule.  It  was  cited  by  counsel  and  con- 
sidered by  us  in  the  Sa?2  Mateo  Case , but  we  did  not  think 
it  militated  against  our  decision,  and  we  did  not  deem  it  nec- 
essary to  extend  the  discussion  by  noticing  it  in  the  opinions 
delivered.  But  after  carefully  reviewing  the  case,  in  conse- 
quence of  its  being  so  confidently  relied  on,  and  the  only 
one  relied  on,  as  being  inconsistent  with  our  decision  on 
this  point,  we  think  it  may  well  be  cited  by  us  as  a strong 
authority  in  support  of  our  judgment.  These  tax  cases 
certainly  are  not  within  the  exception  recognized  in  that 
case.  The  case  is  the  only  authority  cited — unless  the  Illi- 
nois Railroad  Tax  Cases  (92  U.  S.,  575)  were  so  regarded 
by  counsel — claimed  to  be  in  conflict  with  our  deci- 
sion on  this  point,  and  the  Hoboken  Land  Case  cited  had 
no  relation  at  all  to  what  is  necessary  to  constitute  a valid 
levy  of  a public  tax.  No  authority  was  cited  to  show  that 
a tax  levy  upon  property  to  be  assessed  upon  evidence  of 
its  value  is  one  of  the  exceptions  to  the  general  rule,  that 
an  opportunity  to  be  heard  before  property  can  be  taken 
from  its  owner  and  appropriated  to  public  use,  is  an 
essential  element  of  “ due  process  of  law.” 


61 


In  the  Illinois  Railroad  Tax  Cases,  referred  to  by  coun- 
sel, the  points  discussed  and  relied  on  were,  that  the  act 
under  which  the  tax  was  levied  and  equalized  was  void 
as  being  in  contravention  of  the  Constitution  of  Illinois; 
and  that  the  bills  in  chancery  tiled  presented  no  case  for 
an  injunction,  for  the  reason  that  there  had  been  no  pay- 
ment or  tender  of  so  much  of  the  tax  as  was  conceded 
ought  to  be  paid.  The  court  rested  its  decision  mainly 
upon  the  latter  ground,  but  also  held  that  as  the  Supreme 
Court  of  Illinois,  had  decided  the  act  not  to  he  in  contra- 
vention of  the  State  Constitution,  that  decision  would  con- 
trol the  action  of  the  Courts  of  the  United  States.  The 
Court,  however,  expressed  its  concurrence  with  the  views 
of  the  State  Supreme  Court  on  that  point.  In  the 
course  of  the  opinion  delivered,  it  was  said,  that  the 
State  Board  of  Equalization  of  Illinois,  in  equalizing  the 
taxes  of  the  several  counties — the  equalization  being  by 
classes  and  counties — need  give  no  notice  to  individual 
tax-payers,  other  than  such  as  the  law  afforded;  but,  as  I 
understand  the  decision,  this  was  said  with  reference  to 
the  point,  whether  the  statute  was  valid  under  the  State 
Constitution.  There  does  not  appear  to  have  been  any 
point  argued,  or  relied  on,  as  to  what  constitutes  “ due 
process  of  law;”  and  the  court  in  its  decision  does  not  de- 
cide, discuss,  or  even  allude  to  the  question,  as  to  what  are 
the  necessary  elements  of  “ due  process  of  law,”  with  ref- 
erence to  taxation,  or  otherwise,  within  the  meaning  of 
the  Fourteenth  Amendment  to  the  National  Constitution. 
That  question  was,  evidently,  not  considered.  We,  there- 
fore, do  not  regard  the  observations  made  in  the  course  of 
the  opinion  upon  statutory  notice  in  its  relation  to  the 
equalization  of  taxes,  on  the  question  of  the  validity  of 
the  statute  under  the  State  Constitution,  or  other  casual 
remarks  upon  points  not  argued,  or  well  considered,  as 
authoritative  upon  the  point  now  under  consideration. 

This  case,  as  was  the  San  Mateo  Case , has  been  labor- 
iously prepared,  and  elaborately  argued  by  many  eminent 


r 


62 


counsel^  and  if  the  industry  of  the  Attorney-General,  and  of 
a large  number  of  attorneys  and  special  counsel  for  the 
numerous  counties  interested  has  failed  to  find  any 
recognition  of  the  principle  they  were  endeavoring  to 
maintain,  either  in  the  practice  of  the  several  States, 
in  the  text-books,  or  decisions,  or  even  dicta  of  the 
courts,  we  think  it  will  be  safe  to  presume  that  none  can 
be  found.  The  assertion  of  counsel,  which  is  extraordinary 
for  the  positiveness  with  which  it  is  made,  that  the  court 
‘‘finds  no  warrant  whatever  in  the  books”  for  the  views 
expressed  in  the  San  Mateo  Case,  that  an  opportunity  to 
be  heard,  before  property  can  be  compulsorily  taken  from 
a person  in  the  form  of  a general  tax  upon  property,  is  an 
essential  element  in  “ due  process  of  law,”  may  be  attrib- 
uted to  the  zeal  of  the  advocate.  It  is  not  founded 
upon  any  pretense  that  the  language  quoted  from  the 
various  cases  cited,  is  not  found  in  the  decisions,  but 
on  the  ground  that  in  some  of  the  cases  the  decision 
did  not  turn  upon  the  precise  point,  whether  such  an  op- 
portunity is  an  essential  element  of  “due  process  of  law,” 
and  that  in  other  cases  the  question  arose  in  relation  to 
local  assessments  for  street  improvements  and  the  like, 
and  not  on  assessments  for  taxes  for  general  revenue  un- 
der laws  providing  for  the  ordinary  general  expenses  of 
the  State,  county,  or  city. 

As  to  the  first  class  of  cases,  one  of  the  counsel  of  the 
defendants  well  says,  and  his  language  is  adopted  as  a 
clear  general  statement  of  a principle  often  acted  upon  by 
the  courts:  “The  existence  of  doctrines  and  rules  of  law 
is  often  shown  and  established  by  a continuous  and  uniform 
series  of  judicial  dicta,  incorporated  into  their  opinions  by 
judges  arguendo,  although,  perhaps,  the  actual  facts  of  the 
cases  under  discussion  did  not  absolutely  require  the  state- 
ment of  such  doctrines  or  rules.  And  here  you  will  dis- 
criminate. ....  These  expressions  of  judicial  opin- 
ion may  be  correct,  or  may  not  be  correct.  They  may  be 
expressions  of  well-settled  rules,  of  well-settled  and  es- 


63 


tablished  principles — principles,  the  statement  of  which  is 
not  absolutely  necessary  to  the  final  decision — and  yet  a 
continuous  and  uniform  series  of  such  judicial  statements 
is  often  very  high,  in  fact  the  highest  evidence  of  the  ex- 
istence of  the  rule  of  law  which  they  do  set  out.  One 
simple  dictum  may  not  be  of  much  weight,  or  it  might 
have  much  weight,  depending  largely  upon  the  ability, 
the  character,  and  authority  of  the  judge.  But  a uniform 
concensus  of  such  judicial  expressions  of  opinion,  even 
when  they  are  dicta  of  different  judges  in  various  courts, 
especially  when  they  have  been  accepted  by  able  text- 
writers,  and  not  contradicted  by  a single  direct  decision,  is 
as  high  evidence  of  a doctrine  or  rule  as  can  be  found.” 

In  all  the  cases  of  this  class  cited  by  the  court,  even  if 
the  decision  did  not  turn  upon  this  point  of  constitu- 
tional law,  the  discussion  was  cognate  to  it,  and  the  Judges 
clearly  and  distinctly  stated  the  right  to  an  opportunity  to 
be  heard,  as  a constitutional  right.  Some  of  these  declara- 
tions can  scarcely  be  called  dicta , and  they  relate  both  to 
general  taxation  and  local  assessments.  While  such  asser- 
tions of  the  principle  of  law  may  not  be  of  so  controlling 
a character  as  a decision  of  a court  of  acknowledged  au- 
thority, directly  determining  the  point  in  issue  upon  mature 
consideration,  they  are,  certainly,  of  some  authority,  as  be- 
ing the  deliberately  expressed  opinions  of  eminent  Judges, 
and  entitled  to  great  weight.  So,  also,  so  distinguished  a jur- 
ist and  text-writer  as  Chief  Justice  Cooley,  gives  it  as  his 
deliberate  opinion — as  well  as  states  it  as  a rule  drawn  from 
the  authorities  cited  by  him — that  notice  of  the  proceedings 
and  opportunity  to  be  heard  are  essential.  His  language  is: 
“We  should  say  that  notice  of  proceedings  in  such  cases  and 
an  opportunity  for  a hearing  of  some  description  were  mat- 
ters of  constitutional  right.  It  has  been  customary  to  provide 
for  them,  as  a part  of  what  is  ‘ due  process  of  law 5 for  these 
cases,  and  it  is  not  to  be  assumed  that  constitutional  provi- 
sions, carefully  framed  for  the  protection  of  property>  were 
intended,  or  could  be  construed  to  sanction  legislation  under 


64 


which  officers  might  secretely  assess  one  for  any  amount 
in  their  discretion,  without  giving  him  an  opportunity  to 
contest  the  justice  of  the  assessment.  It  has  often  been 
pointedly  and  emphatically  declared  that  it  is  contrary  to 
the  first  principles  of  justice  that  one  should  be  condemned 
unheard;  and  it  has  also  been  justly  observed  of  taxing 
officers  that  ‘ it  would  be  a dangerous  precedent  to  hold 
that  any  absolute  power  resides  in  them  to  tax,  as  they 
may  choose,  without  giving  any  notice  to  the  owner.  It 
is  a power  liable  to  great  abuse/  and  it  might  safely  have 
been  added,  it  is  a power  that  under  such  circumstances 
would  be  certain  to  be  abused.”  “The  general  principles 
of  law  applicable  to  such  tribunals  oppose  the  exercise  of 
any  such  power.” 

In  the  other  class  of  cases  arising  out  of  local  assess- 
ments the  point  was  directly  in  issue,  and  the  point  in 
the  case  upon  which  the  decision  turned,  and  in  no  case 
was  there  any  distinction  drawn  between  taxation  for  spe- 
cial local  purposes  and  general  taxation.  There  can  be  no 
difference.  In  either  case,  whether  general  taxation  or 
local  assessment  for  special  purposes,  the  tax  or  assessment 
is  levied  and  collected  under  and  by  virtue  of  the  sover- 
eign power  of  taxation.  There  is  no  difference  in  the 
power  or  principle  exercised.  The  only  difference  recog- 
nized is  the  difference  in  the  mode  of  ascertaining  the 
proper  amount  to  be  paid  by  each.  Both  are  assessed  and 
collected  for  a public  purpose,  as  the  party’s  share  of  the 
public  burden,  but  the  local  assessment  is  distributed  over 
a smaller  number  of  persons  and  a more  limited  territory, 
and  is  usually  assessed  upon  that  part  of  the  property  sup- 
posed to  be  especially  benefited.  It  is  not  always,  and 
perhaps  not  usually,  assessed  according  to  the  value  of  the 
property,  but  according  to  benefits,  or  according  to  the 
square  foot  or  front  foot  or  number  of  acres,  or  on  some 
such  principle  or  of  apportionment.  It  is  as  necessary  to  ap 
portion  it  according  to  some  fixed,  uniform  rule,  requiring 
action  of  a judicial  nature,  as  in  the  case  of  general  taxa- 


65 


tion.  This  rule  is  the  only  distinction  recognized — both 
systems  of  assessment  and  collection  resting  ultimately 
upon  the  sovereign  power  of  taxation.  Emory  vs.  The 
City  of  San  Francisco , 28  Cal.,  349,  and  People  vs.  Mayor 
of  Brooklyn , 4 Com.,  420,  well  illustrate  the  only  distinc- 
tion between  general  taxation  and  local  assessments,  and 
none  affect  the  point  under  discussion.  In  both  it  is  nec- 
essary to  ascertain  the  amount,  extent,  and  character  of 
the  property  which  forms  the  basis  of  the  public  charge, 
and  on  account  of  which  it  is  to  be  collected,  in  order  to 
properly  apportion  to  each  owner  his  proper  share  of  the 
public  burden.  There  is  as  great  necessity  for  him  to 
have  an  opportunity  to  be  heard  before  the  tax,  in  the  case 
of  general  taxation  becomes  final,  as  there  is  in  the  case 
of  an  assessment  for  local  purposes,  as  street  improve- 
ments. The  levying  and  collection  of  taxes  for  general  pur- 
poses, under  laws  providing  for  general  taxation,  are  just 
as  clearly  a depriving  of  the  owner  of  his  property  as  the 
levy  and  collection  of  a street  or  other  assessment  for  local 
purposes.  It  is  impossible  to  distinguish  them  on  this 
point,  and  no  distinction  is  made  in  the  books.  A deci- 
sion of  the  point,  as  to  notice  and  opportunity  to  be  heard 
in  a case  of  a street  assessment,  is  just  as  clearly  an  au- 
thority directly  in  point  on  the  question  at  issue  as  though 
made  in  a case  of  general  taxation,  and  it  would  be  equally 
controlling.  The  authorities  arising  upon  the  assessment 
cited,  therefore,  are,  in  our  judgment,  authorities  directly 
and  fully  in  point. 

Again,  so  far  as  we  are  advised — and  such  is  the  state- 
ment in  the  books,  which  has  not  been  controverted — it 
has  been  the  usual  practice  in  the  legislation  of  all  the 
States,  at  some  point  ip  the  proceedings,  to  levy  and  col- 
lect a tax  based  upon  property,  where  it  is  necessary  to 
ascertain  its  amount,  character,  and  value,  before  the  lia- 
bility becomes  finally  and  irrevocably  fixed,  to  give  to  the 
owner  or  tax-payer  an  opportunity  to  be  heard.  Such  has 
always  been,  and  is  now,  the  case  under  the  Constitution 
6 


66 


of  California,  except  as  to  railroads  operated  in  more  than 
one  county;  and  where  there  has  been  a departure  from 
the  rule,  and  the  validity  of  such  statutes  litigated,  on  the 
ground  of  want  of  due  process  of  law,  as  we  have  seen, 
the  statutes  have  been  overthrown.  The  fact  of  such  gen- 
eral practice  in  legislation  is  very  persuasive  evidence 
that,  in  the  estimation  of  the  legislators  and  people  of  the 
several  states,  an  opportunity  to  be  heard  in  such  cases  is 
an  important  element  in  “ due  process  of  law.”  This  is  of 
itself  authority  entitled  to  serious  consideration.  As  the 
case  stands,  then,  no  decision  of  any  Court,  no  dictum  of 
any  respectable  judge,  other  than  so  far  as  the  cases  cited 
may  be  so  regarded,  no  passage  from  any  text-writer  has 
been  brought  to  our  notice  which  is  in  direct  conflict  with 
the  law  and  principles  as  stated  in  the  citations  made  by 
us  on  this  point  in  the  San  Mateo  Case. 

In  view  of  the  numerous  dicta — conceding  them  to  be, 
properly,  dicta — of  able  judges  in  one  class  of  cases 
cited;  of  the  able  decisions,  directly  in  point,  in  the 
other  class  arising  under  local  assessment  laws;  of  the 
assumption  of  the  existence  of  the  rule  by  the  United 
States  Supreme  Court  in  Davidson  vs.  New  Orleans;  of 
the  adoption  and  laying  down  of  the  rule  by  text-writers 
of  the  highest  eminence  and  judicially  recognized  author- 
ity; in  view  of  the  general  legislation  of  the  States  upon 
the  subject,  from  the  beginning  recognizing,  and,  practi- 
cally, acting  upon  the  principle,  and  in  view  of  the  further 
fact,  that  no  decision  of  a judge,  or  statement  of  the  rule 
by  text-writers  to  the  contrary,  has  been  brought  to  our 
notice,  we  think  that  the  Court  was  fully  justified,  in  the 
San  Mateo  Case,  in  expressing  the  belief,  that  the  authori- 
ties established  beyond  all  controversy,  that  somewhere 
in  the  proceeding  of  assessing  a tax  upon  propert}7,  where 
it  is  necessary  to  ascertain  its  amount,  character,  and 
value,  as  a means  of  apportionment  under  a law,  or  State 
Constitution — at  some  point  before  the  amount  of  the 
assessment  becomes  finally  and  irrevocably  fixed — the 


67 


statute,  or  State  Constitution,  must  provide  for  notice  to 
be  given  to  the  owner  of  the  property  taxed,  and  an  oppor- 
tunity be  afforded  to  make  objections  and  be  heard  upon 
them.  If  this  defendant , on  its  large  amount  of  property,  can 
be  lawfully  taxed  unheard , then  it  is  competent  for  the  State  to 
abolish  all  right  to  be  heard , and  every  person  can  be  taxed  un- 
heard at  the  arbitrary  will  of  the  taxing  officers . 

We  have  never  contended  that  some  species  of  taxes, 
as  a poll  tax,  license  tax  upon  occupations,  trades,  etc., 
where  the  tax  is  specific,  and  not  ad  valorem, , and  does  not 
depend  upon  the  amount  of  the  business  done,  and  tbe 
like,  may  not  be  levied  without  an  opportunity  to  be 
heard.  Taxes  of  these  and  like  kinds  operate  upon  all 
alike,  and  a hearing  would  be  of  no  possible  avail.  The 
law  itself  fixes  the  amount.  It  is  a legislative  act, 
wherein  the  objects  of  taxation  are  indicated,  and  amount 
fixed  alike  for  all,  leaving  nothing  of  a judicial  nature 
to  inquire  into  or  determine.  But,  where  the  tax  is  based 
upon  the  amount,  character,  condition,  and  value  of  propr 
erty,  the  amount  of  business,  income,  etc.,  and  it  is  neces- 
sary to  inquire  into,  examine,  hear  evidence,  and  decide 
upon  these  matters,  in  order  to  assign  to  each  individual 
his  proper  share  of  the  public  burden,  he  is  entitled  to 
notice  of  some  kind,  and  an  opportunity  to  be  heard,  be- 
fore the  extent  of  his  liability  is  finally  and  irrevocably 
fixed.  The  notice  may  not  be  required  to  be  personal  to 
each  individual,  or  anything  other  than  statutory,  but  the 
statute  should  fix  some  time  within,  and  place  at  which, 
he  may  appear,  and  must  give  to  the  tax-payer  a right  and 
some  opportunity  to  appear  and  be  heard  upon  the  matter. 
He  may  not  succeed  in  reducing  his  tax,  but  the  law  afford- 
ing an  opportunity  presumes  that  justice  will  be  done 
upon  proper  hearing  and  proofs,  by  the  officers  charged 
with  the  duty  of  doing  justice  in  these  matters.  To  the 
suggestion  that  a party  is  as  much  entitled  to  be  heard 
upon  the  fixing  of  the  rate  of  taxation,  as  to  ascertaining 
the  kind,  amount,  and  value  of  the  property,  it  is  sufficient 


68 


to  observe  that  fixing  the  rate  is  a matter  of  legislative 
discretion  and  a legislative  act.  An  estimate  of  the  amount 
of  revenue  required — the  probable  total  amount  of  property 
upon  which  it  must  be  imposed  being  made — the  rate  is 
fixed  by  the  Legislature  upon  that  basis,  making  the  allow- 
ance, suggested  by  experience,  for  inability  to  collect  the 
whole  tax.  When  fixed,  it  operates  equally  upon  all.  It  is 
only  when  it  is  necessary  to  ascertain  the  kind,  amount, 
condition,  and  value  of  each  man’s  property  for  the  pur- 
pose of  apportioning  his  proper  share  of  the  burden,  that 
it  is  necessary  to  act  judicially,  and  to  give  an  opportunity 
to  be  heard  before  the  amount  shall  be  finally  and  irrevo- 
cably fixed. 

Second.  We  are  of  the  opinion,  expressed  in  the  San 
Mateo  Case , that  the  statement  required  by  section  3,664 
of  the  Political  Code,  as  adopted  in  1880,  does  not  afford 
notice  and  an  opportunity  to  be  heard  sufficient  to  con- 
stitute “ due  process  of  law,”  within  the  meaning  of  the 
constitutional  provision,  for  the  reasons  there  stated.  (8 
Sawyer,  296.)  In  this  case,  the  assessment  was , largely, 
in  excess  of  the  valuation  furnished  by  the  railroad  offi- 
cials, in  pursuance  of  section  3,664.  As  to  the  supposed 
Statutes  of  1881,  an  error  in  the  printed  journal  appears, 
which  was  not  called  to  our  attention  at  the  hearing 
of  the  San  Mateo  case.  Upon  counting  the  names  of 
those  appearing  among  the  ayes  in  the  printed  journal 
(Jour.  Ass.,  24th  session,  page  472)  there  are  found  to  be 
forty-one  names,  which  constitute  just  a majority,  although 
they  are  footed  up  as  thirty-nine,  and  the  announcement 
by  the  Speaker  was,  that  there  were  thirty-nine  ayes,  and 
thirty -two  noes.  The  Speaker  declared  “that  this  was 
not  the  final  action  on  the  bill,  and  that  the  House  had 
concurred  in  Senate  amendments  to  Assembly  Bill  Ho. 
475,  by  a vote  of  thirty-nine  ayes,  to  thirty-two  noes.”  (Id., 
473.)  Mr.  Paulk  appealed  from  the  decision  of  the  Chair, 
“ on  the  ground  that  forty-one  votes  were  required  for 
concurrence.”  On  motion  of  Mr.  Hoitt,  this  appeal  was 


69 


laid  on  the  table.  Mr.  Hale  filed  a protest,  the  ground  be- 
ing “ that  on  vote  taken  on  the  motion  to  concur  in  the 
said  Senate  amendments,  and  the  only  action  taken  by  this 
Assembly  on  said  bill,  as  amended  in  the  Senate,  whereby 
it  was  passed  by  the  Assembly,  there  was  less  than  a ma- 
jority of  the  members  of  the  Assembly  voting  therefor; 
and,  therefore,  said  bill,  having  upon  such  final  vote  re- 
ceived less  than  a constitutional  majority  of  the  Assembly, 
I protest,  as  aforesaid,  that  said  bill  should  have  been  de- 
clared lost.”  (Id.,  475. ) The  Speaker  then  again  “ stated 
that  the  action  on  Senate  amendments  to  the  bill  was  not 
a final  action  on  the  bill , and,  consequently,  concurrence  or 
non-concurrence  in  the  amendments  required  a majority 
vote  only.”  (Id.,  475.)  Mr.  Griffith  thereupon  said: 
“ The  decision  of  the  Speaker  and  the  House,  to  the  effect 
that  less  than  a majority  of  the  whole  can  concur  in  an 
amendment  which  may  take  all  the  virtue  out  of  a bill, 

I regard  as  dangerous “Wherefore  I desire  to 

enter  my  solemn  protest  against  such  proceedings.”  (Id., 
475. ) And  Mr.  Kellogg  said:  “ I desire  to  have  my  protest 
entered  upon  the  journal  of  this  Assembly  against  the  de- 
cision of  the  Speaker,  in  declaring  that  the  Assembly  had 
concurred  in  the  Senate  amendments  to  the  bill,  . . . 
for  the  reason  that  the  journal  shows  that  forty-one  mem- 
bers did  not  vote  aye  in  concurring  with  said  amendments.” 
This  was  the  last  action  of  the  House  on  this  bill.  It  will 
be  seen,  then,  that,  while  upon  counting  yip  the  ayes  in  the 
printed  journal  forty-one  names  are  found,  yet  that  they 
were  footed  up  and  carried  out  as  thirty -nine;  the  vote 
was  announced  by  the  Speaker  as  thirty-nine,  and  the 
whole  subsequent  action  of  the  House  was  upon  the  as- 
sumption that  there  were  but  thirty-nine.  Upon  com- 
paring the  printed  journal  with  the  original  xoritten  journal, 
however,  on  file  in  the  office  of  the  Secretary  of  State,  it 
is  conceded,  on  all  sides,  that  they  do  not  agree  in  the 
names  voting  aye,  the  original  written  journal  containing 
only  forty  names,  one  of  the  names  in  the  printed  journal 


70 


not  appearing  in  the.  written  journal.  We  are  of  opinion 
that  the  written  journal  is  the  authentic  official  record, 
and  that  it  corresponds  with,  and  is  sustained  by,  all  the 
other  parts  of  the  printed  journal,  and  with  the  announce- 
ment of  the  Speaker,  and  all  the  action  of  the  House,  and 
that  it  must  control.  It,  therefore,  affirmatively  appears 
that  the  act  never  passed,  and  never  became  a law  of  the 
State  of  California. 

Besides,  it  was  officially  announced  by  the  Speaker  at 
the  time,  and  so  recorded,  that  this  was  not  the  final  passage 
of  the  bill , and  that  it  was  on  this  ground  that  the  amend- 
ments were  concurred  in  by  a vote  less  than  the  number 
required  by  the  Constitution  on  the  final  passage  of  a bill. 
There  was  no  appeal  from  this  decision,  and  it  does  not 
appear  to  have  been  revoked.  Ho  other  vote  appears  to 
have  been  had,  or  other  announcement  by  the  Speaker 
made  in  regard  to  this  bill.  Ho  other  action  was  had  by 
the  House,  except  on  March  4th,  being  the  last  act  before 
adjournment  sine  die,  the  bill  was  reported  as  correctly  en- 
rolled, and  as  having  been  presented  to  the  Governor  for 
approval.  Ho  action  was  taken  on  this  report,  and  the 
bill  does  not  appear  to  have  been  reported  to  the  House  as 
having  been  approved.  At  the  time  of  the  adjournment 
of  the  Legislature,  therefore,  there  was  an  appeal  pending, 
lying  on  the  table,  liable  to  be  called  up  at  any  time  from 
the  very  decision  of  the  Chair  declaring  the  amendments 
to  be  concurred  in.  Thus,  there  bad  been  no  final  action 
on  this  question,  unless  the  report  of  the  Committee  on 
Enrollment,  without  further  action  thereon,  can  be  so  re- 
garded, and  the  whole  matter  was  still  in  the  control  of 
the  House,  and  unfinished  business,  when  the  Legislature 
was  dissolved  by  adjournment  and  lapse  of  time. 

At  the  time  the  assessment  in  question  was  made,  then, 
neither  the  Constitution  nor  any  statute  of  California 
gave  the  defendant  any  right,  or  afforded  it  any  legal  no- 
tice of  the  proceeding,  or  opportunity  to  be  heard  as  to 
the  correctness  or  propriety  of  the  assessment.  The  as- 


71 


sessment  was  an  arbitrary  exercise  of  power  by  the  State 
Board  of  Equalization,  according  to  its  own  will  and 
pleasure.  It  is  true  that  in  some  of  the  cases,  though  not 
in  this  case,  an  agent  of  defendant  did  appear  before  the 
board,  after  the  assessment  was  made,  and  sought  to  get 
the  assessment  reduced;  and  the  board,  after  hearing  the 
application,  refused  to  reduce  the  assessment,  but  upon 
what  grounds  it  does  not  appear.  The  defendant  offered 
to  show,  by  the  testimony  of  members  of  the  board,  upon 
what  ground  the  refusal  was  made,  but  the  evidence  was 
ruled  out  on  the  objection  of  the  plaintiff  that  it  was  in- 
competent. As  there  was  no  law  authorizing  such  an 
application  or  hearing,  or  authorizing  a modification  of 
the  assessment  by  the  board  upon  such  application,  and 
the  listening  to  the  application  was  a mere  matter  of  grace, 
it  is  the  legal  presumption  that  the  board  acted  in  con- 
formity with  the  law  and  put  its  refusal  on  that  ground — 
that  it  would  be  unlawful  to  reduce  the  amount.  But 
whether  it  did  or  not  can  make  no  difference. 

If  such  a right  and  opportunity  to  be  heard  is  an  essen- 
tial element  of  “ due  process  of  law,”  the  law  must  provide 
for  it  as  a right.  The  party  is  not  required  to  accept  the 
boon  by  the  favor  or  good  nature  of  the  officers.  And  as 
the  proceeding  would  be  wholly  without  the  pale  of  the 
law,  it  will  not  be  presumed  that  the  board  would  act 
with  that  nice  regard  to  judicial  fairness,  or  that  proper 
sense  of  judicial  responsibility,  that  would  characterize 
their  proceedings  when  acting  wholly  within  the  limits  of 
their  official  duties  as  imposed  upon  them  by  law. 

Third.  The  next  question  is  whether  the  provision  of 
the  State  Constitution,  under  which  the  assessment  in  ques- 
tion was  made,  is  in  conflict  with  the  clause  of  the  Four- 
teenth Amendment  to  the  National  Constitution,  which 
provides  that  no  state  “ shall  deny  to  any  person  within 
its  jurisdiction  the  equal  protection  of  the  laws.”  In  order 
that  my  views  on  this  point  may'  be  presented  in  a con- 
nected, unbroken  order,  I shall  adopt  the  reasoning  con- 


72 

tained  in  the  discussion  of  the  fifth  nninf  ^ . . 

“ "?„T  1 M/'  I can,0  “4ZT 

■ that  „„  TC.  fnmZT’"‘,  *«“"  «*«*> 

security  to  everv  r>Pr  • ^ u m e^ect  a fundamental 
private^  rfo-ht  tW  ? the  State  in  resPect  of  every 

firmation  tf  equa^^^  “ “ af" 

the  law  -g  . ^ 7 1 n&tlts  t0  ad  persons  before 

,m  . What’ then> 1S  equality  of  protection  ? A civil  rie-ht 

&5S^S£*£ 

*“  •;*  ‘r,'h°c“™ 

y-  nold  otherwise  would  Ipnr?  tn 
of  the  rio-ht  of  thp  H*n+«  + 7 d to  the  affirmation 

w«id  zzt*  p*t  °f  ,h**  ci“ » aW 

“It  is  ni  , d ? fn  eqnallt->7  with  hi*  fellow-victims  ” 

^ -*-7—  oir; 

&to»rSSHs: 

hsse^s 

case  ot  property,  as  property,  to 


73 


be  affected  by  a tax,  or  any  other  imposition  imposed 
upon  it  as  a thing  of  value,  a distinction  cannot  be  made  to 
depend  upon  character,  or  occupation,  or  quality,  or  any 
individual  characteristic  of  the  citizen.  To  hold  other- 
wise would  be  to  set  up  the  very  essence  of  tyranny  and 
arbitrary  power.” 

“ c Equal  protection  ’ is  the  same  protection  under  the 
same  circumstances;  all  are  to  stand  alike  in  like  intrin- 
sic conditions.  Holding  property  as  'property  is  certainly 
a like  intrinsic  condition.  In  the  administration  of  jus- 
tice, if  the  criterion  of  a right  to  sue  be  value,  all  must 
have  the  same  right  when  the  same  value  is  con- 
cerned; or  if  the  criterion  be  the  nature  of  the  contro- 
versy, all  must  have  the  same  right  whose  cases  are  of 
the  same  nature.  This  appears  to  be  too  clear  for  dis- 
cussion.” 

“ So,  too,  in  the  matter  of  taxation,  if  the  tax,  as  in  this 
case,  be  laid  upon  the  values  of  property,  all  persons  must 
stand  on  the  same  footing,  according  to  the  value  of  their 
respective  property,  as  to  the  proportionate  burden  they 
are  to  bear  in  respect  to  the  value.” 

“ The  farmer  must  be  assessed  at  the  same  rate  for  the 
value  of  his  land  as  the  lawyer  for  the  value  of  his  land, 
and  he  must  have  the  same  right  of  notice  and  hearing, 
etc.,  as  his  fellow  citizens  of  other  callings;  and  if  de- 
ductions are  provided  to  be  made  from  values  on  account 
of  debts  (which  is  only  a method  of  reaching  effective 
value)  of  one  class  of  citizens,  they  must  be  made  from 
those  of  other  classes,  without  reference  to  what  particular 
characteristics  as  citizens  or  persons  they  may  have,  as 
sex,  or  race,  or  age,  or  quality,  or  calling.” 

“ The  basis  of  the  imposition  being  property,  as  such,  the 
fact  that  certain  property  is  owned  by  a corporation,  or  a 
white  man,  or  man  of  bad  character,  or  a clergyman,  can- 
not be  made  the  ground  of  a levy,  that,  both  in  form,  in 
fact,  and  in  result,  is  unequal  and  injurious.  Any  other 
doctrine  necessarily  implies  that  the  State  may  carry  such 


74 


unequal  exactions  to  the  end  of  complete  confiscation  by 
edict  of  all  the  property  of  any  class,  or  man,  who,  dur- 
ing the  passion  of  the  hour,  may  not  be  in  the  sunshine  of 
popularity.” 

It  is  insisted  that  the  constitutional  provision  under 
which  the  tax  in  question  is  levied  does  not  deny  to  the 
defendant  the  equal  protection  of  the  laws,  and  it  is  sought 
to  maintain  the  validity  of  the  provision  on  the  ground  that 
it  is  a proper  exercise  of  the  principle  of  classification — 
that  the  property  is  classified  according  to  its  condition 
and  use — and  on  that  ground  properly  taxed  upon  a 
basis  different  from  that  applied  to  other  property.  The 
provision  to  be  considered  is  as  follows: 

“ A mortgage,  deed  of  trust,  contract,  or  other  obliga- 
tion by  which  a debt  is  secured,  shall,  for  the  purposes 
of  assessment  and  taxation,  be  deemed  and  treated  as  an 
interest  in  the  property  affected  thereby.  Except  as  to 
railroad  and  other  quasi  public  corporations , in  case  of 
debts  so  secured,  the  value  of  the  property  affected  by 
such  mortgage,  deed  of  trust,  contract  or  obligation,  less 
the  value  of  such  security,  shall  be  assessed  to  the  owner 
of  the  property,  and  the  value  of  such  security  shall  be 
assessed  and  taxed  to  the  owner  thereof,  in  the  county, 
city,  or  district  in  which  the  property  affected  thereby  is 
situate.  The  taxes  so  levied  shall  be  a lien  upon  the  prop- 
erty and  security,  and  may  be  paid  by  either  party  to  such 
security;  if  paid  by  the  owner  of  such  security,  the  tax  so 
levied  upon  the  property  affected  thereby  shall  become  a 
part  of  the  debt  so  secured;  if  the  owner  of  the  property 
shall  pay  the  tax  so  levied  on  such  security,  it  shall  con- 
stitute a payment  thereon,  and  to  the  extent  of  such  pay- 
ment a full  discharge  thereof:  Provided , that  if  any  such 
security  or  indebtedness  shall  be  paid  by  any  such  debtor 
or  debtors,  after  assessment  and  before  the  tax  levy,  the 
amount  of  such  levy  may  likewise  be  retained  by  such 
debtor  or  debtors,  and  shall  be  computed  according  to  the 
tax  levy  for  the  preceding  year.” 


75 

Whatever  the  property,  then,  real  or  personal,  mortgaged 
to  secure  a debt,  the  value  of  the  debt  so  secured,  in  the 
case  of  everybody,  “ except  a railroad  and  other  quasi  public 
corporation ,”  is  to  be  deducted  from  the  value  of  the  prop- 
erty mortgaged,  and  the  value  only  of  the  property  mort- 
= o-aa-ed,  “ less  the  value  of  such  security,  shall  be  assessed 
and  taxed  to  the- owner  of  the  property,  and  the  value 
of  such  security  shall  be  assessed  and  taxed  to  the 
owner  thereof.”  That  is  to  say,  that  the  property  is  to  be 
divided  between  the  parties  according  to  the  value  ot  their 
respective  interests,  and  whatever  the  nature  or  extent  o 
the  interest  of  each  in  the  property  may  be,  it  shall  be 
taxed  to  the  real  owner.  But  in  the  case  of  “ a rai  roa 
or  other  quasi  public  corporation,”  there  is  to  be  no  reduc- 
tion of  the  value  of  the  mortgaged  property— no  division 
according  to  the  interests  of  each-and  the  whole  is  to  be 
taxed  to  one  party,  although  he,  in  reality,  does  not  own 
the  whole.  In  one  case,  if  property  is  mortgaged  to  the 
extent  of  half  its  value,  the  owner  is  taxed  upon  one-halt 
the  value,  and  the  owner  of  the  debt  secured,  or  the  mort- 
gagee, is  taxed  upon  the  other  half.  But  in  the  other  case, 
the  owner  of  the  legal  title  to  the  property  is  assessed  and 
taxed  upon  the  whole  value  of  the  property,  and  the  other 
party,  who  is  interested  to  the  extent  of  one-half,  upon 
none.  A,  a natural  person,  or  even  a corporation  other 
than  one  of  the  excepted  class,  has  $50,000  in  cash  a 
the  property  he  has— and  purchases  of  B,  another  natural 
person,  a piece  of  real  estate  for  $100,000,  that  being  its 
actual  value,  paying  one-half  down,  and  giving  a mort- 
gage for  $50,000  to  secure  the  balance  of  the  purchase- 
money.  The  Constitution  in  effect  says— and  in  this  in- 
stance such  is  the  real  substantial  state  of  facts— that  A 
and  B each  has  $50,000  in  the  property,  one-half  not  hav- 
ing been  paid  for  by  A,  and  each  shall  be  assessed  and 
pay  a tax  upon  his  own  interest  in  it,  amounting  to  $50,- 
000.  A,  in  this  instance,  is  worth  only  $50,000,  and  if  he 
pays  taxes  upon  a larger  amount,  he  pays  taxes  upon 


76 


property  he  does  not  ronllv  nx 

ter** el,e- mi>  “«»*  £Z2gsz  ;zd. 

has  ^^oTasC aShpuSi 5b  fC°Trati0n’”  als0 

secure  the  balai  ofYe 2?  ^ing  a ^ tgage  to 
as  in  the  other,  the  actual  ilS^T ^ ? **'  Case> 
is  $50,000.  They  stand  precisely  ur.nn  ll  “ ‘ ^ p,'°pert->' 
m all  particulars  with  referenced the  ^ Same  footinS 
only  $50,000  in  the  property  J?  nl t Property.  C has 

other  half— and  B,  the  rest.  But  i fvmo  Paid  for  the 

tution  says  that  C shall  neverthel  " ^ °aSe  the  Consti- 
pay  taxes  upon  the  whole  pronerfw’  m aSS6SSed  for  and 
really  owns,  and  B shall  not  be  reauiredZ  he 

18  to  say,  that  C shall  not  only  ly  If  ^ That 
Property,  but  the  tax  unon  R>f  17  ™ tax  0,1  lts  own 
the  amount  of  the  tax  asses  ,)  ProPert^ > t!|at  money,  to 

B,.h,n  b«  t,k,7bv  thX'.  „ ”IK"  ,M’m’  t. 

r™«d  lh„  „„  c is:z  z:zZb?  ? “a, 

•h’r*  '•<  th«  P»Wio  burdons.  Til  B'> 

more  than  C’s  share  of  the  nnhhe  n ’ b “S  80  muoh 
fact  B’s  share,  the  result  nf  nZ  ■ Uldens>  and  being  in 

much  property  from  C fo/vM^^-t’  ^ t0  take  so 

also  to  arbitrarily  take  ’it  from  C U^WlthouUomPensati°n,  but 
benefit  of  another  private  parti/  b the  «** 

result  would  be  the  same  whether  ’Zf  comPen^tion.  The 
thus  situated  and  mortaaaed  ill  1 pr0perty  °f  A>  B and  C, 

*—  *•  « 

equally  upon  B and  C?  Is  Ceaaalt  7 T"  A.  a“d  or 
of  property  with  A or  eonall  ^ Z protected  in  its  rights 

xoith  all  other  natural  person?  orZllT^  ^ B’ W Cqmlly 
railroad  or  other  ams  Z ’Zl  C°rp°ratl0ns  other  than 


77 


do  they  feel  the  pressure  of  the  public  burdens  equally  and 
alike  ? The  question  does  not  appear  to  me  to  admit  of 
argument.  Upon  the  very  statement  of  the  proposition, 
it  seems  to  me  to  be  self-evident  that  a law  authorizing 
and  requiring  such  proceedings  does  not  afford,  but  ex- 
pressly denies,  the  equal  protection  of  the  laws.  The  Con- 
stitution, in  the  one  case,  says  that  “ the  mortgage,  deed  of 
trust,  contract,  or  obligation  ” shall  be  “ deemed  and 
treated  as  an  interest  in  the  land  affected  thereby,”  which, 
in  the  cases  supposed,  together  with  the  debt  secured,  it 
undoubtedly,  in  fact,  is;  but,  in  effect,  the  Constitution 
says  it  is  not  so  in  the  other  case.  Different  kinds  of 
property  may  require  to  be  taxed  in  different  forms  and 
modes,  in  order  to  be  equally  taxed.  And  classifications 
of  property  for  purposes  of  taxation  should  have  reference 
to  the  just  equality  of  burdens,  so  far  as  that  is  practically 
attainable.  Classification  should  have  reference  to  the 
different  character,  situation,  and  circumstances  of  the 
property,  making  a different  form  or  mode  of  taxation 
proper,  if  not  absolutely  necessary.  It  cannot  be  arbi- 
trarily made,  with  mere  reference  to  the  nationality,  color, 
or  character  of  the  owners,  whether  natural  or  artificial 
persons,  without  any  reference  to  a difference  in  the  char- 
acter, situation,  or  circumstances  of  the  property.  Should 
second  mortgagees  foreclose  a mortgage  on  a railroad  or 
other  property  of  a “ railroad  or  other  quasi  public  cor- 
poration,” and  a natural  person  become  the  purchaser  of 
the  road  or  other  property  subject  to  the  prior  mortgage, 
at  the  next  annual  assessment  the  amount  of  the  first  mort- 
gage bonds  or  indebtedness  secured  would  be  deducted 
from  the  value  of  the  road  or  other  property,  and  the 
amount  of  the  bonds  or  other  indebtedness  assessed  to  the 
mortgagees.  Such,  also,  would  be  the  result  in  the  case 
before  supposed  if  C — a railroad  or  other  quasi  public  cor- 
poration— should  convey  its  land  to  a natural  person,  sub- 
ject to  the  mortgage  to  B;  and  although  there  would  be 
no  change  in  the  condition,  circumstances,  use,  or  value  of 


the  property — the  change  being  only  in  the  owner — C’s 
grantee  would  only  be  required  to  pay  one-half  the  amount 
of  taxes  which  C had  been  compelled  to  pay,  and  B,  who 
before  paid  nothing,  would  be  required  to  pay  the  other 
half.  Should  the  Southern  Pacific  Railroad  and  its  lands 
pass  into  the  hands  of  a natural  person  upon  a foreclosure 
and  sale,  under  a second  mortgage,  subject  to  the  mortgage 
now  on  them,  the  value  of  this  very  security  would  be  de- 
ducted from  the  value  of  the  property  at  the  next  annual 
assessment.  Thus,  although  the  property  would  in  all  re- 
spects be  the  same,  and  similarly  situated,  and  applied  to 
the  same  uses — for  natural  persons  as  well  as  corpo- 
rations may  own  and  operate  railroads— a mere  change 
in  the  ownership  would  require  and  effect  an  entire 
change  in  the  mode  and  basis  of  the  assessment,  and 
the  amount  of  taxes  levied  on  the  owner.  Nothing, 
it  seems  to  me,  could  more  clearly  demonstrate  the  un- 
soundness of  the  proposition,  that  only  an  admissible 
classification  of  property  for  the  purposes  of  taxation  is 
involved  in  the  different  schemes  provided  for  taxing  the 
property  of  “railroad  and  other  quasi  public  corpora- 
tions,” and  the  property  of  natural  persons  and  of  other 
corporations.  Railroad  and  other  quasi  public  corpora- 
tions are  not  even  put  upon  the  same  footing  with 
other  corporations,  the  latter  being  placed  upon  an  equal- 
ity with  natural  persons.  A mere  change  of  ownership 
under  the  provisions  in  question  largely  affects  the  amount 
of  taxes  paid  by  the  owner  upon  the  same  property,  with- 
out any  change  in  the  character,  condition,  value,  use,  or 
circumstances  of  the  property  itself.  A provision  that  a 
black  man  shall  pay  double  the  amount  of  taxes  paid  by 
a white  man  on  the  same  kind  of  property  similarly  situ- 
ated and  used,  or  upon  the  identical  property,  in  conse- 
quence of  a mere  change  of  ownership  from  a white  man 
to  a black  man,  might  with  as  good  reason  be  sustained 
on  the  principle  of  classification  invoked.  The  classifica- 
tion in  this  case  is  clearly  by  ownership,  and  not  by  con- 
dition or  use. 


That  natural  persons  may  own  and  operate  a railroad 
in  this  State  as  well  as  corporations  is  manifest  from  the 
fact  that  this  road  is  mortgaged  under  the  authority  of 
the  laws  of  the  State,  and  this  of  itself  necessarily  in- 
volves the  power  to  sell  and  convey,  in  case  the  occasion 
arises,  under  a decree  of  foreclosure,  to  any  party  who  is 
willing  to  pay  the  highest  price  for  the  road.  It  also  ap- 
pears as  a fact  in  this  case  that  a natural  person  purchased 
a railroad  operated  in  more  than  one  county,  extending 
from  Marysville,  in  the  county  of  Yuba,  to  Oroville,  in 
the  county  of  Butte,  under  a decree  foreclosing  a mort- 
gage, received  his  conveyance  therefor,  and  that  he  has 
been  operating  it  and  been  assessed,  and  has  paid  taxes 
upon  it  for  more  than  two  years  past.  So,  also,  numerous 
statutes  of  the  States  were  introduced  in  evidence,  grant- 
ing the  right  to  natural  persons,  not  incorporated,  to  build 
and  operate  railroads.  aAn  act  to  provide  for  the  con- 
struction of  a railroad  from  Mokelumne  City  to  Wood- 
bridge,  in  the  county  of  San  Joaquin,”  (Statutes  1862, 
page  97,)  and  an  act  authorizing  the  building  of  a rail- 
road from  the  Embarcadero,  on  the  bay  of  Petaluma,  in 
Sonoma  County,  (id.,  295,)  are  examples  of  numerous  acts 
of  a similar  character  found  scattered  through  the  volumes 
of  the  statutes  from  that  time  to  the  present.  Thus  pri- 
vate parties  owning  and  operating  railroads  covered  by 
mortgages,  and  situated  in  all  respects  precisely  as  rail- 
road corporations  are  situated  with  respect  to  the  same 
kind  of  property,  would  only  be  required  to  pay  taxes 
upon  the  excess  of  the  value  of  the  road  or  other  prop- 
erty over  the  value  of  the  security,  while  the  holder  of  the 
security  would  be  assessed  for  and  pay  the  taxes  on  the 
value  of  the  security.  The  personal  liability  of  each 
would  only  extend  to  the  tax  on  his  own  interest,  and,  in 
many  instances,  the  value  of  the  security  would  equal  the 
whole  value  of  the  property,  thereby  relieving  the  mort- 
gagor of  all  taxes  on  the  property.  This  is  not  classifica- 
tion, therefore,  by  its  condition  or  use,  for  the  purposes  of 
taxation  at  all,  but  by  ownership. 


80 


There  is  no  difference  in  the  rate  imposed;,  it  is  taxed 
according  to  its  value,  like  all  other  property;  no  more, 
and  no  less  tax,  in  the  aggregate,  is  levied.  It  is,  there- 
fore, taxed  upon  the  same  principle  as  other  property ; 
no  more  and  no  less  revenue  is  raised  by  the  classifica- 
tion. The  State  is  not  benefited.  The  burden  is  simply 
taken  from  the  owner  and  thrown  upon  one  who  does 
not  own  the  property  taxed.  It  is  not  taxed  to  and  made 
a personal  charge  upon  the  owner  as  other  property  is 
under  like  circumstances.  This  is  the  only  difference, 
and  that  does  not  affect  the  principle  of  the  taxation. 
Unless  it  is  competent  to  class  the  property  of  Jones, 
whether  land,  or  railroad,  or  other  property,  when  mort- 
gaged, as  belonging  to  Smith,  and  compel  Smith  to  pay 
the  taxes  as  a personal  charge  or  liability  imposed  upon 
him  on  the  property  of  Jones,  who  is  not  to  be  taxed  or 
charged  upon  the  property  at  all,  when  the  same  thing 
is  not  done  as  to  other  property  of  like  kind  and  simi- 
larly situated,  then  this  provision  of  the  State  Constitu- 
tion cannot  be  maintained  on  the  principle  of  classifica- 
tion or  any  other.  The  interests  of  the  mortgagor  and 
mortgagee  are  not  the  same — not  identical.  The  estate 
of  one  begins  where  the  estate  of  the  other  ends.  They 
both  together,  under  that  clause  which  makes  the  mort- 
gage in  all  cases — as  it  does  in  terms — an  interest  in  the 
land,  for  the  purpose  of  taxation,  make  up  the  whole,  so 
far  as  classification  for  the  purpose  of  taxation  is  con- 
cerned. 

Suppose  the  position  of  the  parties,  the  mortgagor  and 
mortgagee  in  this  case,  in  regard  to  the  imposition  and 
payment  of  the  tax  had  been  reversed,  and  the  Constitu- 
tion had  imposed  the  tax  upon  the  whole  as  a personal 
charge  upon,  and  compelled  payment  by,  the  mortgagee 
— the  holder  of  the  security — instead  of  upon  the  mort- 
gagor, the  mortgagor  not  being  taxed  at  all,  would  such 
a provision  have  been  valid  upon  the  principle  of  classi- 
fication, or  any  other  ? Would  the  mortgagee  stand  upon 


81 


the  same  footing  with  other  mortgagees  ? I apprehend 
that  such  a provision  would  not  stand  for  a moment,  in 
the  presence  of  the  provision  of  the  National  Constitu- 
tion assuring  to  all  the  equal  protection  of  the  laws. 
Such  a provision  would  not  operate,  equally,  upon  the  two 
parties  interested  in  the  property,  nor  upon  the  mortgagee 
thus  taxed,  and  other  parties  in  like  circumstances,  where 
the  mortgagors,  are  natural  persons,  or  other  corporations, 
who  are  only  compelled  to  pay  taxes  upon  the  interests  in 
property  which  they  actually  own.  If  the  holder  of  the 
security  could  not  be  taxed  for  the  interest  held  by  the 
owner  of  the  railroad,  land,  or  other  property  mortgaged,  no 
sound  reason  is  apparent  for  holding  that  the  mortgagor 
can  be  taxed  for  the  whole,  and  especially  where,  as  in 
this  particular  instance,  the  value  of  the  security  is  greater 
than  the  value  of  the  estate  of  the  other  party.  There 
cannot  be  one  law  for  one  person,  and  a different  and  more 
onerous  law  for  another,  similarly  situated,  and  both  enjoy 
the  equal  protection  of  the  laws  in  the  particulars  wherein 
such  laws  differ. 

Conceding  the  Fourteenth  Amendment  to  apply  to 
taxation,  as  it  undoubtedly  does,  I think  I hazard  little 
in  saying  that  no  possible  reasoning  can  justify  such 
classification  or  discrimination  under  it.  That  classifica- 
tion, upon  such  principles,  is  arbitrary,  tyrannical,  and  un- 
justifiable. 

There  can  be  no  valid  classification  of  property,  under 
the  State  Constitution , for  the  purposes  of  taxation,  based 
upon  the  uses  to  which  it  is  applied,  except  so  far  as  the 
use  may  give  additional  value  to  the  property;  and  the 
principle  under  the  constitutional  provision  requiring  all 
property  to  be  taxed  at  its  value , would  only  authorize  the 
increase,  or  modification  of  the  assessment,  by  adding  the 
increased  value,  so  arising  from  the  use.  One  owner  may 
pasture  his  land;  another  raise  wheat,  cotton,  or  sugar- 
cane; another  plant  a vineyard  for  the  production  of  wine, 
or  an  orange  grove;  another  erect  buildings  upon  his  land, 
7 


82 


i 


and  enjoy  the  rents  arising  thorefrom;  and  another  devote 
his  to  the  construction  and  operation  of  a railroad.  If 
any  of  these  uses  give  additional  value  to  the  land  or  other 
property,  it  must  still  be  taxed  at  its  actual  value,  be  it 
greater  or  less.  But  under  the  constitutional  provision 
requiring  all  property  to  be  taxed  at  its  actual  value , it  cannot  be 
classified  by  its  uses,  for  the  purpose  of  applying  other  prin- 
ciples of  taxation  than  value  as  a basis  ; or  for  the  purpose  of 
taxing  it  according  to  ownership , so  as  to  make  one  class 
of  owners , as  such , pay  more  than  another ; or  one  class 
of  owners  pay  the  taxes  that  ought  to  be  assessed  against 
and  paid  by  another  class.  The  State  Constitution  does 
not  profess  to  classify  upon  the  basis  of  the  uses  to  which 
property  is  applied.  It  recognizes  no  such  principle  in 
terms  or  by  implication.  It  says  nothing  about  uses; 
but  classifies,  in  terms,  by  ownership,  and  includes  all 
of  the  property  of  the  same  owners  in  its  class  for  non- 
deduction of  the  value  of  the  security — land  and  other 
property  held  for  sale  as  well  as  property  used  for  ope- 
rating railroads,  or  other  corporate  uses  of  quasi  public 
corporations,  without  making  any  reference  whatever  to 
its  uses.  The  only  rule  hy  which  any  property  is  author- 
ized to  be  assessed,  is  according  to  its  value.  The  Con- 
stitution arbitrarily  provides,  as  to  a particular  class,  that 
they  shall  pay  the  taxes  upon  the  interest — according  to 
the  constitutional  definition  of  property — in  the  property 
held  by  another  class  of  owners  who  are  allowed  to  escape 
taxation  altogether,  and  in  this  particular  the  laws  do  not 
bear  upon  or  protect  the  former  equally  with  the  latter. 
It  provides  that  railroads  and  other  quasi  public  corpora- 
tions shall  pay  taxes  upon  property  they  do  not  own — shall 
pay  other  people’s  taxes.  This  discrimination  against 
such  corporations  is  not  a taxation  but  a confiscation  of 
their  property,  not  for  the  benefit  of  the  public , for  there  are 
no  more  taxes  collected  in  the  aggregate , but  for  the  benefit  of 
other  property  owners , icho  thereby  escape  their  share  of  the 
public  burdens.  If  the  arbitrary  discrimination  and  classi- 


83 


* 


fication  found  in  this  case  can  be  legally  made  under  the 
National  Constitution  and  the  law  of  the  land,  then  the 
subordinate  State  Constitution  or  law  can  be  so  framed  as 
to  dispose  of  a man’s  rights  in  property  of  all  kinds  by 
arbitrary  classification  and  definition,  without  regard  to 
the  real  facts,  circumstances,  or  condition  of  the  property. 
A person  may,  by  such  subordinate  statutory  provisions, 
be  classified  and  defined  out  of  the  equal  protection  of  the 
laws  guaranteed  by  the  National  Constitution;  and  if  so 
with  reference  to  this  provision,  he  can  also  be  classified 
and  defined  out  of  uniformity  in  the  operation  of  the  laws 
in  other  particulars;  out  of  the  protection  of  due  process 
of  law  and  of  the  provision  forbidding  a law  impairing 
the  obligation  of  contracts  or  taking  property  for  public 
use  without  just  compensation;  and,  indeed,  out  of  all  the 
guaranties  of  the  Constitution,  State  or  national.  I am 
not  arguing  that  property  of  all  kinds  may  not  he  taxed 
where  it  is  found,  provided  all  owners  are  put  upon  the 
same  footing;  but  in  this  case  there  is  a personal  liability 
sought  to  be  enforced  against  the  defendant  for  taxes  not 
imposed  upon  others  in  like  circumstances,  without  any 
means  provided  for  reimbursement,  such  as  are  applicable 
to  others  similarly  situated,  by  the  party  who  ought  to  pay 
the  tax. 

For  authorities,  including  decisions  of  the  United  States 
Supreme  Court,  illustrating  this  point,  reference  is  made 
to  the  San  Mateo  Case , 8 Saw.,  302-4. 

It  is  argued  that  the  taxing  of  the  whole  value  of  mort- 
gaged property  of  railroads  and  other  quasi  public  corpo- 
rations to  the  corporation  owning  it,  subject  to  the  mort- 
gage, while  the  same  thing  is  not  done  with  respect  to  the 
property  of  natural  persons  or  other  corporations  similarly 
situated,  is  valid  as  being  simply  a franchise  tax — a tax 
for  the  privilege  of  being  a corporation,  “ a tax  imposed 
as  a return  for  privileges  and  powers  not  possessed  by  in- 
dividuals.” It  is  further  said  that  it  is  not  material  by 
what  standard  a franchise  tax  is  measured — whether  the 


84 


tax  is  in  gross  or  measured  by  receints  , „ 

property  acquired,  or  by  any  other  sldard  T °f 
are  cited  from  some  of  the  qfn+  n * da  d;  aild  cases 
claimed  to  have“l„\  S ! * * franchise  tax  * 

.*»  *.  v„,„e,. ..  Si'Xir'  pTrtj'’  :r,r?r“ 

(ArtSlL, ?e?® ia/“1’  The  “ ' dfa“^  as provided '*» 
article  and  ection  is  hi.  T P‘'°Per^  aS  USed  in  this 
credits  ’ V ® y red  t0  indude  mone^ 

things  . ‘ ‘ /„“nAwef,a“d  aH  othur  matters  and 

Ao-ain  ^ cabbie  of  pnvate  ownership.”  (ft) 

'A&aiu>  the  franchise,  roadway  etc  of  oil  „ •/  y 
operated  in  more  thon  , . etc*?  ot  a11  laill*oads 

assessed  by  the  State  BoqrW’V"  mT.  thl.s  State  be 
mte.”  (Ib.  sec.  10  } Th  °+i  qJ.m  izahon  at  their  actual 
ant,  under  the  Constitution  of  °f  ^ defend' 

teeing  1^-  ,t  “?  °"8,,‘"tio".  *■»"»- 

amt  etreefC  ui  LT  1”M”  °f  '*"• 

counsel  upon  the  ornwi  arguments  of  plaintiffs’ 


85 


and  through  their  large  and  widespread  influence,  have 
obtained,  and  they  are  obtaining,  control  of  Legislatures, 
etc.,  etc. 

If  this  he  so,  then  it  is  of  the  utmost  importance  to  every 
natural  person  in  the  United  States  that  these  guaranties  of  the 
Fourteenth  Amendment  to  the  National  Constitution  should  be 
maintained  in  all  their  length  and  breadth.  They  are  the  only 
means  of  protection  left  to  the  people.  If  these  unequal  taxes 
can  be  imposed  upon  the  class  of  corporations  named  in  the  Con- 
stitution, the  position  of  the  parties  can  be  reversed , and  the  un- 
equal tax  now  thrown  upon  the  corporations  may  hereafter  be 
imposed  upon  the  other  parties.  If  these  can  be  taxed  without 
a hearing , then  all  or  any  class  of  persons  can  be  taxed  with- 
out a hearing  ; and  if  there  is  good  ground  for  the  alarm  mani- 
fested by  the  counsel  of  the  plaintiff ',  such  corporations,  when 
they  acquire  the  deprecated  power  and  control  indicated,  will 
not  be  likely  to  be  slow  in  shifting  the  unequal  burden  to  the 
other  side.  There  is,  therefore,  upon  that  hypothesis,  no  safety 
to  the  people,  except  in  most  rigidly  maintaining  the  guaranties 
of  the  Fourteenth  Amendment  in  their  broadest  scope. 

Fourth.  Upon  the  point  as  to  whether  the  provision  of 
the  State  Constitution  under  which  the  tax  in  question 
was  levied,  is  valid  by  virtue  of  the  power  of  the  State 
over  corporations,  under  the  authority  reserved  to  the 
State  under  the  Constitution  to  amend,  alter,  or  repeal  the 
laws  under  which  they  were  organized,  or  otherwise,  I 
refer  to  the  quite  full  discussion  of  the  point  under  the 
sixth  head  in  my  opinion  in  the  San  Mateo  Case , 8 Saw., 
304.  I shall,  however,  make  some  additional  observations. 

In  order  to  sustain  the  validity  of  the  tax  on  that 
ground,  the  constitutional  provision  must  operate  as  an 
amendment  to  the  general  statute  of  California,  by  which 
it  imposes  upon  railroad  and  other  quasi  public  corpora- 
tions, under  the  amended  statute,  as  a condition  of  their 
continued  existence,  a liability  to  be  taxed  otherwise  than 
as  natural  persons  and  other  corporations  are  taxed.  It  is 
not  pretended  by  anybody  that  any  express  intention  to 


86 


amend  the  act  relating  to  corporations  is  found  in  the  new 
Constitution,  or  that  any  reference  is  anywhere  made  to 
the  act.  The  operation  of  the  amendment  of  the  statute 
is  sought  to  be  worked  out  by  implications,  and  the  neces- 
sities of  the  case,  which  require  the  tax  to  be  sustained  on 
that  ground,  as  there  is  no  other  on  which  it  can  rest. 
But  repeals  or  amendments  of  statutes  by  implication 
never  were  favored;  and,  under  our  Constitution,  limiting 
the  power  of  the  legislature  to  the  passage  of  acts  embrac- 
ing but  a single  subject,  which  must  be  expressed  in  the 
title  of  the  act,  and  forbidding  an  amendment  otherwise 
than  by  re-enacting  the  whole  section  as  amended,  would 
seem  to  render  the  rule  still  more  restrictive  in  its  opera- 
tion. No  reference  to  this  matter  of  taxation  is  made  in 
any  part  of  the  chapter  devoted  to  corporations.  The 
provision  is  found  in  the  chapter  providing  for  taxation,  and 
which  deals  with  taxation,  and  only  taxation , as  taxation. 
It  is  manifest,  that  the  idea  of  amending  the  act  relating 
to  corporations  was  never  contemplated  by  the  convention 
in  framing,  or  the  people  in  adopting,  the  Constitution. 
We  are  satisfied  that  the  charge  must  he  sustained,  if 
sustained  at  all,  only  as  a tax,  without  reference  to  the 
power  of  the  State  to  impose  further  conditions  upon 
corporations  not  imposed  at  their  creation  by  amend- 
ment to  the  general  laws  under  which  they  became  in- 
corporated. 

But  if  the  State,  under  its  power  to  amend  the  laws  under 
which  corporations  are  formed,  is  entitled  to  impose  this 
charge,  not  imposed  upon  natural  persons,  and  other  cor- 
porations, under  like  circumstances,  as  a condition  of  its 
continued  future  existence,  the  corporation  is  not  bound 
to  accept  the  condition,  and  go  on.  No  charter  can  be 
forced  upon  an  association  of  natural  persons,  and  no  new 
or  more  onerous  conditions  can  be  forced  upon  a corpora- 
tion already  formed.  It  may  elect  to  dissolve  and  retire 
from  the  field  of  enterprise  occupied,  rather  than  accept 
the  new  conditions;  and  such  conditions  might  be  imposed 


87 


as  would  compel  that  course.  But  until  accepted  they  form 
no  part  of  the  charter,  and  impose  no  new  valid  obligations. 
An  acceptance  of  the  new  conditions  cannot  be  presumed 
while  the  corporation  is  protesting  that  none  have  been 
imposed;  or,  if  attempted  to  be  imposed,  is  insisting  that 
they  are  invalid,  void  and  of  no  effect — and  in  every 
way,  and  by  all  means  in  its  power,  is  resisting  the  at- 
tempt of  the  State  to  give  effect  to  this  assumed  change 
in  its  rights  and  obligations — while  it  is  still  denying  the 
power  of  the  State  to  make  the  change  and  refusing 
to  acquiesce  in  it.  Till  the  corporation  elects  to  ac- 
cept the  new  conditions  imposed,  or  gives  some  evidence 
of  such  election,  rather  than  dissolve,  there  is  no  im- 
plied promise  or  obligation  to  assume  the  additional 
burdens  laid  upon  it,  or,  as  in  this  instance,  to  pay  the 
additional  tax  thus  imposed  in  invitum,  upon  which  an 
action  can  be  maintained.  This  corporation,  like  every  other 
person,  against  whom  a right  is  claimed,  certainly  is  en- 
titled to  litigate  the  question,  whether  any  new  valid  obli- 
gations or  conditions  have  been  imposed  upon  it,  before  it 
can  be  called  upon  to  determine  whether  it  will  dissolve  and 
retire,  or  accept  the  conditions  and  proceed.  A refusal  to 
accept,  surely,  can  give  no  right  of  action,  which  depends  upon 
acceptance.  If  there  is  any  remedy  in  behalf  of  the  State 
against  a corporation  declining  to  accept,  but  still  continu- 
ing to  exercise  its  functions  in  violation  of  the  existing 
law,  it  is  by  some  proceeding  in  the  Courts,  in  the  nature 
of  an  information,  to  dissolve  the  corporation  and  wind 
up  its  affairs;  and  this,  it  appears  to  me,  is  the  remedy  in 
this  case,  if  there  is  an  amendment  to  the  act  under  which 
the  defendant  is  incorporated,  imposing  the  liability  of 
this  unequal  and  unjust  tax  upon  it,  as  a condition  of  its 
continued  existence,  and  the  corporation  refuses  to  accept 
it,  or  to  submit  to  it. 

The  doctrine  asserted,  and  sought  to  be  maintained, 
that  because  a corporation  owes  its  origin  and  existence 
to  the  State — is  a creature  of  the  State — it  and  all  its 


88 


belongings  are  under  the  arbitrary  power  and  control 
The  State,  throug^ge^raMavra  ^apphcatde  ^to^ll”  imOar 

S»SJ  “d  P~P«W  of  natural  p.„J 

p opei  ty  is  in  the  corporators,  and  their  rights  in  the 
pi opei ty  and  acquisitions  are  as  sacred  in  their  corporate 
«...  .»3-  other  of  their  r.latioa.  eeeietp,  „rT  £ 

S,M*  Constitution  provided  that  the  prop, 
e.ty  of  corporations  might  be  taken  for  public  use 
thou  any  compensation,  and  without  a trial  or  hearing 
of  any  kind,  such  as  for  the  sites  of  public  building  pUb° 
be  streets  or  squares,  or  for  the>o 'of  railwa^nd  the' 
corporations  had  denied  and  resisted  the  validity  of  such 
provision  I apprehend  that  no  Court  would  Told  that 
because  it  did  not  immediately  dissolve  and  retire  from 
business,  upon  the  adoption  of  such  a provision  that  it 
had  been  accepted,  and  thenceforth  become  one’ of  the 
conditions  of  the  future  continued  existence  £ 
poiation,  and  in  consequence  of  the  fact  that 
f'ii’ht  ihuuceforth  he  arbitrarily^k^^^  appropriated 

“ “P  h*”'«  » ~»pe«,S  TO 

such  a provision  would  be  no  more  monstrous  than  the 

*he  - 

mg  the  sovereign  power  of  taxation— has  norther  end 
accomplish  and  accomplishes  no  other  purpose;  and 


89 


that  the  rights  of  the  parties  must  be  determined  on  that 
hypothesis  alone— that  is  to  say,  the  hypothesis  that  it 
is  a tax  merely,  without  any  reference  to  a change  of 
the  fundamental  conditions  upon  which  the  corporation 
is  to  continue  in  existence.  If  not,  then  that  the  new 
conditions  have  not  been  accepted,  and  there  is  no  ground 
upon  which  this  action  can  be  maintained.  The  suit  is 
simply  one  at  law  for  a tax  and  nothing  else,  and  the 
plaintiff  must  recover  on  that  theory,  and  on  the  case 
made,  or  not  at  all.  If  this  tax  can  he  imposed  upon  the 
defendant,  simply  because  it  is  a corporation,,  when  it 
could  not  be  imposed  upon  natural  persons  holding,  own- 
ing, and  using  its  property  under  like  conditions  in  all 
other  respects,  then  it  would  be  difficult  to  point  out 
what  rights  are  left  to  corporations,  or  natural  persons 
in  their  corporate  relations,  which  the  State,  under  the 
Fourteenth  Amendment,  or  otherwise,  is  bound  to  re- 

^ Fifth.  At  the  time  of  the  assessment  and  levy  of  the 
tax  in  question  there  was  a deed  of  trust  in  existence,  and 
operative,  to  secure  a large  indebtedness,  executed  by  de- 
fendant to  I).  0.  Mills  and  Lloyd  Tevis,  before  the  adop- 
tion of  the  present  Constitution  of  the  State  of  California, 
which  covered  the  Southern  Pacific  Railroad,  its  tracks, 
depots,  rolling-stock,  and  all  appurtenances-the  road 
aggregating  1,150  miles  in  length,  of  which  over  700  are 
completed  and  in  operation.  It  also  covered  all  the  lands 
granted  by  the  United  States  to  aid  in  the  construction  of 
said  railroad,  aggregating,  as  estimated,  10,000,000  acres, 
after  excluding  reserved  lands  embraced  in  the  statu- 
tory description.  This  deed  of  trust,  or  mortgage,  was 
duly  recorded  in  the  several  counties  of  the  State  through 
which  the  road  extended,  and  in  which  the  lands  were 

situated.  , , . 

A portion  of  the  road,  and  of  the  lands  mortgaged,  was 

situated  in  the  county  of  Santa  Clara.  The  mortgage  was 
for  |46,000  per  mile,  of  which  amount  bonds  have  been 


90 

issued  to  the  amount  of  f 39, 000  per  mile.  The  land, 

'»«  patented,  including 

fLdan^t  the  T'"  °°Unty’  had  bee“  ^d  to  det 

tendant  m the  several  counties  in  which  they  were  situ- 

count^f  tT  U 1 VfaIUe’  a“d  without  an^  reduction  on  ac- 
count of  the  mortgage,  and  the  taxes  duly  paid  So 

o?the0road  "‘Sr  “ °f  the  assessed 'value 

Thu^all  tt  g'St+°  ’ 6tC-’  ^ made  in  consequence, 
thus  all  the  property  embraced  in  the  morto^e  was 

“‘I  “Jte  « «'  « value,  wlthSi™ 

° ' “ “ the  amount  °«  account  of  the  mortgage.  The 
said  nartv  oTth^fi^  ^ f°UowinS  covenant:  “And  the 

to  and  with  th  h<3  m Pa'-t  hel'eby  a»rees  and  covenants 
to  and  with  the  sa,d  parties  of  the  second  part,  and  their 

successors  in  trust,  that  it  will  pay  all  ordinary  and  extrT 

oidinary  taxes,  assessments,  and  other  public  burdens  and 

described  ^ ^ may  be  impost  upon  the  property  herein 
escribed  and  hereby  mortgaged,  and  every  part  thereof  • 

Zi  jZr  Pai'tieS  °f  the  SeC°nd  "be  survtr  of 

nf  “ °,r  tbeU  accessors  in  said  trust,  or  any  one  or  more 

said  Lrt  ofSth  f b0"dS7  maJ,in  °aSe  of  defauU  of  the 
said  party  of  the  first  part  in  this  behalf,  pay  and  dis- 

c aige  the  same,  and  any  other  lien  or  incumbrance  upon 

elityPTro7:hiCh  ^ iD  a'ly  inZIZ 

equity,  he  oi  become  in  effect  a charge  or  lien  thereon 
pnor  to  these  presents,  or  to  which  this  mortgage  may  be 
ubject  or  subordinate,  and  for  all  payments  thus  ride 

Z oT;;ZmfjtheS^  ShaU  be  alI°Wed  “Merest 
eieon  at  the  rate  of  seven  per  centum  per  annum-  and 

sue  payments,  with  the  interest  thereon,  shall  be  and 

2e  lt’SeC^  t0  !h6m  by  th6Se  ^ -d  Se- 
aled to  be  payable  and  collectable  in  the  same  sort  of 

currency  or  money  wherein  they  shall  have  bTe„  paid 

nirt  t 16  -S?me  *ha  * b<5  pa-vable  said  party  of  the  first 
partf^partiesof  the  second  part  uponiemand  in 

be  paid  out  of  r 7 °r  PT  Paylng  the  same>  and  “ay 

ot  paid  out  of  the  proceeds  of  the  sale  of  said  property 
and  franchises  hereinbefore  provided.”  P P ty 


91 


It  is  gravely  and  earnestly  insisted  here  that  under  this 
covenant  the  defendant  has  hound  itself  to  the  trustees  to 
pay  the  whole  taxes  assessed  upon  the  property  coveie 
/the  mortgage;  that  if  the  tax  should  be  assessed  upon 
defendant  and  there  should  be  a recovery  in  this  case  and 
payment  of  the  judgment,  the  defendant  would  jay  no 
more  than  it  is  bound  to  pay  under  the  covenant  m t 
trust  deed,  and  could  not  be  injured;  thereto  e the  tax  is 
valid  and  a recovery  should  be  had  in  tin sac  ion, ejn 
though  the  tax,  as  levied  against  the  defendant,  is  urn 
thorized  by  any  valid  law,  or  was  levied  without  the  au- 
thority of  any  law.  It  would  seem  to  be  only  necessary 
to  state  the  proposition  to  make  manifest  its  fallacy  rh 
proposition  in  substance  is,  that  if  a valid  tax  had  bee 
levied  the  defendant  had  bound  itself  by  a contract  to 
protect  a third  party,  with  whom  the  plaintiff  is  not  in 
privity  against  it,  by  payment  or  allowing  such  third  paity 
to  pay  it  and  make  it  a secured  charge  against  defendant 
Ami  since  this  is  so,  although  it  is  not  authorized  by  an} 
valid  law,  it  would  not  injure  the  defendant  to  levy  the 
tax  against  it  and  compel  it  to  pay  the  whole  amount  of 
tax  that  ought  to  have  been  properly  levied  on  somebody 
on  account  of  the  property;  therefore  the  Plalntlfl  g 
to  recover,  although  there  is  no  valid  tax  levied  against 
him  or  anybody  else-no  tax  for  which  anybody  is  now 
legally  liable.  Somebody  ought  to  have  been  made  pei- 
sonally  liable  to  pay  this  tax  by  a proper  and  legal  assess- 
ment of  it;  and  if  anybody  had  been  made  liable  defend- 
ant would  have  been  bound  to  pay  it  under  its  covenant, 
but  there  was  no  valid  assessment,  either  against  the  de- 
fendant or  anybody  else,  yet  the  defendant  is  personally 
liable  and  plaintiff  ought  to  recover.  Such  is  the  reason- 

ins:  presented  to  us.  , . , 

This  tax,  as  levied,  is  either  valid,  as  properly  levied 
under  the  law,  or  it  is  void  and  its  validity  must  depend 
upon  the  law.  It  cannot  depend  upon  the  tact  that 
private  parties  by  an  anterior  contract,  with  which  the 


92 


State  and  county  are  not  in  privity,  had  a stipulation 
as  to  which  should  pay  any  tax  properly  levied.  If 
valid  as  against  defendant  so  as  to  make  it  personally 
responsible,  then  the  plaintiff  is  entitled  to  recover, 
whether  it  would  be  injured  or  not,  and  there  is  no  need 
to  invoke  the  principle  that  defendant  cannot  be  injured 
by  doing  what  it  is  insisted  it  in  good  morals  ought  to 
do.  If  the  tax  as  levied  is  not  valid  and  a legal  per- 
sonal charge  upon  the  defendant  under  the  law,  without 
regard  to  any  contract  between  private  parties  as  to  wTho 
shall  pay  a valid  tax  upon  the  land  when  levied,  then 
there  is  no  valid  tax  or  personal  charge  against  anybody, 
for  no  tax  purports  to  have  been  levied  against  the  trus- 
tees in  the  trust  deed,  or  against  the  holders  of  the 
security.  There  is  no  tax  upon  which  the  covenant  can 
operate.  This  action  is  not  based  upon  moral  equities, 
or  even  upon  equities  recognized  and  enforced  by  courts 
of  equity.  It  is  a dry  action,  at  law,  to  recover  what  is 
alleged  to  be  a sum  of  money  legally  due,  and  for  which 
the  defendant  is  legally , personally  liable  by  reason  of  a 
valid  levy  of  a tax  against  it.  That  is  the  cause  of  action 
alleged,  and  upon  that  a recovery  must  be  had,  if  at  all, 
and  according  to  the  allegata  of  the  complaint.  This  is 
not  a suit  in  equity  to  enforce  a lien  for  a tax.  It  is  not 
an  application  for  an  injunction  against  the  collection  of 
the  tax,  in  which,  possibly,  the  court  might  consider 
whether  there  were  any  equities  which  should  call  upon 
it  to  deny  the  injunction,  or  relief,  affirmatively  sought. 
It  is  not  a case  for  the  exercise  of  discretion.  It  is  an  action 
resting  upon  a strictly  legal  personal  liability.  It  is  not 
enough  that  a valid  tax  to  some  extent  might  have  been 
levied.  There  must  be  such  a tax  as  throws  a legal  liabil- 
ity upon  the  defendant  to  pay  to  the  plaintiff*  the  sum 
claimed,  or  there  can  be  no  recovery.  But  had  there  been 
a valid  tax  levied  against  the  covenantee,  or  mortgagee, 
on  account  of  the  property,  this  would  not  have  autho- 
rized a recovery  against  defendant  by  reason  of  the  cove - 


93 


nant  alone.  The  covenant  cannot  affect  the  case.  The 
covenant  was  between  the  defendant  and  the  trustees,  for 
Z Zlit  of  ft.  latter,  or  r.th.r  ft,  W-hold,~ 
cured  and  not  for  the  benefit  of  the  plaintiff.  The  plain- 
tiff is  not  in  privity  with  them.  But  suppose  the  covenant 
had  been  between  defendant  upon  a due  consideration 
and  the  trustees,  expressly  made  for  the  bene, 
plaintiff,  in  such  form,  if  such  could  be,  as  to  givcplal"- 
tiff  a right  of  action  on  the  covenant.  It  would  be  nec- 
essary to  set  out  the  contract  on  which  the  right  of  ac  ion 
rested,  and  make  it  the  basis  or  ground  of  action.  Nothing 
of  the  kind  has  been  done.  The  theory  of  this  action  , 
that  a valid  tax  has  been  legally  assessed  against  defen- 
dant for  which  it  is  personally  liable  under  the  Constitu- 
Z L . recovery  is  seegh,  on  ft..  g™»d  » 
plaint,  and  upon  no  other;  and  it  can  be  had  upon  no 

0tThere  were  two  kinds  of  covenants  in  use  in  mortgages 
and  trust-deeds  at  the  time  the  trust-deed  in  question  was 
executed;  one  a covenant  that  the  mortgagor  would  pay 

all  taxes  that  might  be  assessed  on  the  moi  gage  P P 
erty,  and  in  default  of  payment,  that  the  mortgagee  miB 
pay  it  himself  for  the  protection  of  his  security,  and  upon 
such  payment  that  the  taxes  so  paid  should  be  added  to 
the  debt,  and  draw  like  interest.  This  was  simply  to  pio- 
tect  his  security  against  other  parties  who  might  subse- 
quently acquire  liens,  and  to  convert  his  advances  into 
principal  and  fix  the  rate  of  interest.  The  purpose  of 
this  covenant  was  not  to  render  the  mortgagor  liable  to 
pay  a tax  which  he  was  not  already  liable  to  pay,  but  it 
was  to  enable  the  mortgagee  to  pay  it  for  his  own  protec- 
tion, in  case  the  mortgagor  did  not,  and  take  away  the 
voluntary  character  of  the  payment,  so  that  he  could  con- 
vert it  into  a secured  debt,  drawing  interest  as  a part  ot 
the  principal.  The  other  was  that  the  mortgagor  would 
pay  not  only  all  taxes  levied  on  the  mortgaged  property, 
hut  also  all  taxes  that  should  be  levied  upon  the  monejs 


94 


loaned  and  secured.  This  was  an  indirect  way  of  increas- 
ing the  interest  paid  on  the  loan,  and  imposed  an  addi- 
tional burden  upon  the  mortgagor.  This  last  covenant  is 
now  forbidden  and  rendered  void  under  the  new  Constitu- 
tion. 

The  covenant  in  the  mortgage  in  this  case  is  clearly  of 
the  first  kind.  It  only  required  the  mortgagor  to  pay  the 
taxes  or  liens  which  it  was  at  that  time  bound  to  'pay  without 
the  covenant , and  in  no  way  extended  its  liability.  A law,  or 
constitutional  provision,  which  should  compel  him  to  pay 
the  taxes  assessed  upon  the  property  of  the  mortgagee, 
would  enlarge  his  liability  beyond  that  covered  by  his 
covenant,  and  be  void.  This  covenant  only  extended  to 
taxes  for  which  the  defendant  was  already  liable.  Besides, 
if  no  valid  tax  has  been  levied,  then  the  case  is  not  with- 
in the  covenant,  for  the  defendant  cannot  be  called  upon 
under  the  covenant  to  pay  a tax  absolutely  void. 

Again,  suppose  the  covenant  had  been  in  a mortgage 
or  trust-deed  between  two  natural  persons,  made  at  the 
same  time,  the  sum  secured  being  the  whole  value  of  the 
property.  Under  the  constitutional  provision  in  question, 
the  value  of  the  security,  which  in  the  case  supposed,  is  the 
whole  value  of  the  property,  must  be  assessed  to  the  hol- 
der of  the  security , and  made  a personal  charge  on  him 
alone.  It  could  not  be  assessed  to  the  mortgagor , and  made 
a personal  charge  or  liability  on  him,  and  enforced  by  a 
suit  for  a personal  judgment;  because  there  is  no  statute, 
or  constitutional  provision,  purporting  to  authorize  such  a 
proceeding.  Yet  he  has  covenanted  with  the  holder  of 
the  security  in  the  same  sense  as  in  the  trust-deed  in  ques- 
tion, to  pay  the  whole  tax  levied  on  the  land,  and  he 
would  not  he  injured  according  to  the  theory  of  the  plain- 
tiff, if  the  whole  tax  should  be  assessed  and  recovered 
against  him.  If  such  assessment  should  be  made  against 
the  mortgagor  instead  of  the  mortgagee  without  any  law 
for  it,  or  even  purporting  to  authorize  it,  and  a suit  be 
brought  to  recover  a personal  judgment  for  the  amount,  I 


95 


apprehend  that  no  counsel  would  be  found  bold  enough 
to  urge  that  the  utter  invalidity  of  the  tax  is  no  defence 
against  the  suit,  for  the  reason,  that  if  a proper  tax  had 
been  levied  againsffthe  proper  party,  he  would  be  bound 
by  his  covenant  with  that  party  for  the  protection  of  that 
party’s  interest,  alone  to  pay  the  tax,  and,  therefore,  he  is 
not  injured.  If  such  an  action  under  such  circumstances 
could  not  be  maintained  against  the  mortgagor,  then  it 
* cannot  be  maintained  against  the  mortgagor  in  this  case, 
otherwise  there  is  one  law  for  this  defendant  and  another 
law  for  natural  persons,  occupying  in  all  respects,  with  ref- 
erence to  their  property,  precisely  the  same  situation; 
and  there  is  a manifest  denial  of  the  equal  protection  of 
the  laws  in  this  particular,  as  well  as  in  the  others.  They 
are  not  equal  before  the  laws.  If  the  constitutional  pro- 
vision in  question  is  void,  then  there  is  no  law  under 
which  this  tax  could  be  levied  against  defendant,  and  it  is 
utterly  void  and  cannot  form  the  basis  for  a recovery.  In 
my  judgment  the  provisions  of  the  State  Constitution,  upon 
which  the  validity  of  this  tax  and  the  right  to  recover 
alone  rest,  violate  the  provisions  of  the  Fourteenth  Amend- 
ment in  question,  in  four  vital  particulars. 

1.  They  assess  railroad  and  other  quasi  public  corpora- 
tions upon  a different  basis  from  that  adopted  with  respect 
to  natural  persons,  and  other  corporations  similarly  situa- 
ted with  respect  to  their  property  in  the  particulars  in 
these  opinions,  and  in  the  opinions  in  the  San  Mateo  Case 
pointed  out. 

2.  They  provide,  with  respect  to  all  property  other  than 
railroads  operated  in  more  than  one  county,  an  opportu- 
nity to  be  heard  in  the  course  of  the  proceeding,  to  assess 
their  property  before  the  assessment  becomes  irrevocably 
fixed,  while  they  afford  no  such  notice  or  opportunity  to 
be  heard  with  reference  to  railroads  operated  in  more  than 
one  county,  and,  in  both  these  particulars,  deny  to  the  de- 
fendant the  equal  protection  of  the  laws,  within  the  mean- 
ing of  the  Fourteenth  Amendment  to  the  National  Con- 
stitution . 


96 


061936974 


3.  In  not  affording  notice  and  an  opportunity  to  be 
heard  before  the  tax  becomes  finally  and  irrevocably  fixed? 
they  deprive  the  defendant  of  its  property  without  due 
process  of  law. 

4.  In  assessing  a tax  and  enforcing  it  as  a personal  lia- 
bility against  defendant,  upon  property  which  it  does  not 
own,  but  which  is  owned  by  other  parties  who  pay  no  tax 
upon  it,  the  defendant’s  property,  to  the  extent  of  the 
amount  taken  beyond  his  proper  share  of  the  public  bur- 
den, is  taken  for  public  use,  both  without  due  process  of  law, 
and  without  compensation. 

As  there  must  be  judgment  for  defendant  upon  the 
points  arising  under  the  National  Constitution,  it  is  un- 
necessary for  us  to  extend  these  opinions  by  examining 
the  questions  arising,  alone,  under  the  State  laws  and 
Constitution,  over  which  we  would  have  had  no  jurisdic- 
tion, but  for  the  fact  that  the  questions  already  discussed 
are  in  the  case.  Those  are  questions  more  properly  be- 
longing to  the  State  Courts.  We  have  found  the  facts  in 
the  case,  however,  and  if  it  should  turn  out  that  we  are  in 
error  upon  the  points  decided,  the  Supreme  Court  will  be 
called  upon  to  decide  those  questions  also.  If  we  are  not 
in  error,  then  those  questions  will,  doubtless,  be  left  to  the 
State  Courts,  where  they  properly  belong. 

For  the  reasons  herein,  and  in  the  opinion  of  the  pre- 
siding Justice  stated,  in  addition  to  those  given  in  the  sev- 
eral opinions  delivered  in  the  San  Mateo  Case , I think 
judgment  should  be  rendered  for  defendant  as  directed. 

September  17,  1883. 


